Existing-home sales fell in September after hitting the highest level in nearly four years as limited inventory conditions continued to hinder home prices in most of the country, the National Association of Realtors revealed in its latest report.
"Affordability has fallen to a five-year low as home price increases easily outpaced income growth," said Lawrence Yun, NAR chief economist.
"Because they are measured at the contract closing stage, the existing home figures are only now reflecting the steady rise in mortgage interest rates," Capital Economics noted. "We expect the damage to existing home sales from higher mortgage interest rates to be temporary. After all, 30-year mortgage rates have more recently fallen back to 4.5%. And the timelier new home sales numbers are already recovering."
In September, existing-homes sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — fell 1.9% to a seasonally adjusted annual rate of 5.29 million in September from a downwardly revised 5.39 million in August. But September’s numbers are 10.7% above the 4.78 million-unit pace set in September 2012.
In light of this, Jed Kolko, chief economist with Trulia, said the shift from distressed to conventional sales is a clear sign of recovery, with sales, excluding distressed properties, up 25% year-over-year.
Furthermore, the national median existing-home price for all housing types hit $199,200 in September, up 11.7% from same period last year, making this the tenth consecutive month of double-digit year-over-year increases.
Distressed homes, including foreclosures and short sales, accounted for 14% of September sales, up from 12% in August, which was the lowest share since monthly tracking began in October 2008.
Inventory remained unchanged at 2.21 million existing homes available for sale, which represents a 5-month supply at the current sales pace, compared with a 4.9-month supply in August.
However, Kolko said inventory has been increasing since January on a seasonally adjusted basis, which means more homes are available for buyers and a less frenzied market.
In addition, the median time on the market for all homes was 50 days in September, increasing from 43 days in August, but much faster than the 70 days reported for September 2012.
First-time buyers account for 28% of September purchases, unchanged from August, but falling 32% from September 2012.
Analysts with Econoday added, "Sales of existing homes have been flat the last couple of months, down 1.9% in September following a downwardly revised no change reading for August and held down by higher mortgage rates and a still cautious consumer. The annual rate, at 5.29 million, is right at the Econoday consensus for 5.30 million."
“It’s not surprising that we saw some easing in the existing home sales market. Home prices have been rebounding from their lows and mortgage rates were rising during the summer,” Quicken Loans’ Economist Bill Banfield said.“Both of those things impact affordability as we lead into the traditionally slower selling season.”