Despite last month’s slight retreat, existing-home sales jumped back up to their highest annual pace of the year, the latest National Association of Realtors report said.
Additionally, all major regions except for the Midwest experienced gains in September.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 2.4% to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August.
Although sales are at their highest pace of 2014, they still remain 1.7% below the 5.26 million-unit level from last September.
Lawrence Yun, NAR chief economist, said the improved demand for buying seen since the spring has carried into the fall.
“Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline,” he said. “Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline in choices due to the fact that inventory generally falls heading into the winter.”
The median existing-home price for all housing types in September was $209,700, which is 5.6% above September 2013, marking the 31st consecutive month of year-over-year price gains.
Meanwhile, total housing inventory at the end of September fell 1.3% to 2.30 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace.
Unsold inventory is still 6% higher than a year ago, when there were 2.17 million existing homes available for sale.
All-cash sales consisted of 24% of transactions in September, up slightly from August (23%) but down from 33% in September of last year.
Individual investors, who account for many cash sales, purchased 14% of homes in September, up from 12% last month but below September 2013 (19%).
“While fluctuations in interest rates rarely dictate the decision to purchase a home, it can definitely spark interest and influence when a buyer starts aggressively searching. Anyone who loosely follows the housing market likely read the headlines about plummeting rates last week; this can give a boost to existing sales in the coming months, even if these levels are short-lived,” Quicken Loans Vice President Bill Banfield said.
“Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets, which will likely keep interest rates in upcoming weeks hovering near or below where they are now,” said Yun. “This is welcoming news for consumers looking to buy, although they could temporarily become more cautious by less certain economic conditions.”