Existing-Home Sales Regain Momentum in September

Real Estate In-Depth | November 24, 2015

WASHINGTON— Existing–home sales rebounded strongly in September following August’s decline and have now increased year–over–year for 12 consecutive months, according to the National Association of Realtors. All four major regions experienced sales gains in September.

Total existing–home sales, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, increased 4.7% to a seasonally adjusted annual rate of 5.55 million in September from a slightly downwardly revised 5.30 million in August, and are now 8.8% above a year ago (5.10 million).

Lawrence Yun, NAR chief economist, said a slight moderation in home prices in some markets and mortgage rates remaining below 4% gave more households the confidence to close on a home last month. “September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007 (5.79 million),” he said. “While current price growth around 6% is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace.”

The median existing–home price for all housing types in September was $221,900, which was 6.1% above September 2014 ($209,100). September’s price increase marked the 43rd consecutive month of year–over–year gains.

Total housing inventory at the end of September decreased 2.6% to 2.21 million existing homes available for sale, and was 3.1% lower than a year ago (2.28 million). Unsold inventory was at a 4.8–month supply at the current sales pace, down from 5.1 months in August.

“Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent–up sellers realizing the increased equity they’ve gained from rising home prices and using it towards trading up or moving into a smaller home,” says Yun. “Unfortunately, first–time buyers are still failing to generate any meaningful traction this year.”

First–time buyers fell to 29% of sales in September after climbing to their highest share of the year in August (32%). A year ago, first–time buyers represented 29% of all buyers.

NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, AK, said Realtors strongly back the passing of H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015.” Polychron testified in support of the bill yesterday before the U.S. House Financial Services Subcommittee on Housing and Insurance.

“This bill helps expand homeownership and rental housing opportunities at all levels and specifically includes changes to Federal Housing Administration policies that limit the flexible and affordable financing needed by many potential condo buyers—especially first–time buyers.”

All–cash sales rose to 24% of transactions in September (22% in August) and were unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in September, up from 12% in August but down from 14% a year ago. Sixty–seven percent of investors paid cash in September.

According to Freddie Mac, the average commitment rate for a 30–year, conventional, fixed–rate mortgage remained below 4% for the second consecutive month, declining slightly in September to 3.89% from 3.91% in August. A year ago, the average commitment rate was 4.16%.

Properties typically stayed on the market for 49 days in September, an increase from 47 days in August but below the 56 days in September 2014. Short sales were on the market the longest at a median of 135 days in September, while foreclosures sold in 57 days and non–distressed homes took 48 days. Thirty eight percent of homes sold in September were on the market for less than a month.

Distressed sales—foreclosures and short sales—remained at 7% in September for the third consecutive month; they were 10% a year ago. Six percent of September sales were foreclosures and 1% (lowest since NAR began tracking in October 2008) were short sales. Foreclosures sold for an average discount of 17% below market value in September (18% in August), while short sales were discounted 19% (12% in August).

Single–family and Condo/Co–op Sales

Single–family home sales rose 5.3% to a seasonally adjusted annual rate of 4.93 million in September from 4.68 million in August, and were 9.6% above the 4.50 million pace a year ago. The median existing single–family home price was $223,500 in September, up 6.6% from September 2014.

Existing condominium and co–op sales were at a seasonally adjusted annual rate of 620,000 units in September (unchanged from August), and were up 3.3% from September 2014 (600,000 units). The median existing condo price was $209,200 in September, which was 1.9% above a year ago.

Regional Breakdown

September existing–home sales in the Northeast jumped 8.6% to an annual rate of 760,000, and were 11.8% above a year ago. The median price in the Northeast was $256,500, which was 4.0% above September 2014.

In the Midwest, existing–home sales climbed 2.3% to an annual rate of 1.31 million in September, and were 12.0% above September 2014. The median price in the Midwest was $174,400, up 5.4% from a year ago.

Existing–home sales in the South rose 3.8% to an annual rate of 2.21 million in September, and were 5.7% above September 2014. The median price in the South was $191,500, up 6.2% from a year ago.

Existing–home sales in the West increased 6.7% to an annual rate of 1.27 million in September, and were 9.5% above a year ago. The median price in the West was $318,100, which was 8.0% above September 2014.