Existing-home sales bounced back very strongly in September, up 4.7% to nearly reverse the prior month's revised decline of 5%, a decline that now looks like an outlier on a steadily rising slope.
Existing-home sales 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.
Existing-home sales dropped in August despite slowing price growth and a positive turnaround in the share of sales to first–time buyers.
“The biggest surprise in the data was that the first-time buyer share fell to 29% from 32% in August. But despite that decline, we estimate from the monthly sales data this year that first-time buyers have been responsible for 45% of the growth in sales over last year,” said realtor.com Chief Economist Jonathan Smoke. “The September share decline may simply reflect more competition in September by repeat buyers whose closings slipped in August due to the stock market disruptions.
“Existing home sales are impacted by major stock market declines, since at least one in five buyers funds a portion or all of their purchase with stock or retirement accounts. But barring stock corrections that reflect real economic downturns — which we are not experiencing — home sales typically return to the prior trend after stock values stabilize,” Smoke said.
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.
Lawrence Yun, NAR chief economist, says 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 is 6.1% above September 2014 ($209,100). September's price increase marks the 43rd consecutive month of year–over–year gains.
“Home purchase affordability is strong in many markets, and September’s pace of existing sales is evidence that consumers are taking advantage,” said Quicken Loans vice president Bill Banfield. “Rents have skyrocketed to extremely high levels, while rates and home prices have remained relatively flat through the summer months, providing a timely opportunity for new and existing homeowners.”
Total housing inventory at the end of September decreased 2.6% to 2.21 million existing homes available for sale, and is now 3.1% lower than a year ago (2.28 million). Unsold inventory is 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.
Meanwhile, NAR President Chris Polychron 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 Wednesday before the 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 are 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. 38% 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% of September sales were foreclosures and 1% (the 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 home sales rose 5.3% to a seasonally adjusted annual rate of 4.93 million in September from 4.68 million in August, and are now 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 are up 3.3% from September 2014 (600,000 units). The median existing condo price was $209,200 in September, which is 1.9% above a year ago.
September existing–home sales in the Northeast jumped 8.6% to an annual rate of 760,000, and are 11.8% above a year ago. The median price in the Northeast was $256,500, which is 4% above September 2014.
In the Midwest, existing–home sales climbed 2.3% to an annual rate of 1.31 million in September, and are 12% 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 are 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 are 9.5% above a year ago. The median price in the West was $318,100, which is 8% above September 2014.