Sales of existing homes took off in September, jumping 9.4% from August to a seasonally adjusted annual rate of 6.54 million, the National Association of Realtors said in a report on Thursday. Compared to a year ago, sales are up 20.9%.
“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” said Lawrence Yun, NAR’s chief economist. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”
That surge in potential buyers, however, may be met with what Yun says is historically low inventory. At the end of September, housing inventory totaled 1.47 million units, down 1.3% from August and down 19.2% from one year ago when inventory sat at 1.82 million.
Unsold inventory measured as a “months supply” number that gauges how long it would take to sell all the homes if nothing else came on the market, was 2.7 months, NAR said. That’s down from three months in August and four months a year ago.
An improving job market, low rates, and families looking for more space played key roles in the recent activity spike, according to Mortgage Bankers Association senior vice president and chief economist, Mike Fratantoni.
“The primary constraint to even more sales is the plummeting inventory of homes on the market, which is leading to bidding wars and spikes in home prices across the country. Fortunately, we are seeing a pick up in the pace of construction, which should bring more inventory onto the market for next year’s buyers,” Fratantoni said.
The median existing-home price last month was $311,800, up 14.8% from this time last year, and prices rose in every region. According to the report, 71% of homes sold in September were on the market for less than a month at an average of 21 days – an all-time low.
However, risk still remains in the market, said Ruben Gonzalez, chief economist at Keller Williams.
“As long as unemployment remains elevated, there is a possibility that we see layoffs spill into the higher-paying sectors that are currently propping up the housing market”, said Gonzalez. “That broader recovery will likely hinge on medical progress toward ending the pandemic, as well as a strong fiscal stimulus that helps families maintain their incomes while the economy remains at reduced capacity.”