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Real Estate

NAR: Existing home sales dampened by the housing market’s lack of inventory

Expert says housing affordability is worsening due to the lack of supply

After rising for two consecutive months, the nation’s existing home sales declined 2.2% in September, according to the National Association of Realtors.

Total existing home sales – completed transactions that include single-family homes, townhomes, condominiums, and co-ops – decreased to a seasonally adjusted annualized rate of 5.38 million. That being said, sales are now 3.9% above September 2018’s rate.

Lawrence Yun, NAR’s chief economist said despite historically low mortgage rates, sales have not commensurately increased, in part due to a low level of new housing options.

“We must continue to beat the drum for more inventory,” Yun said. “Home prices are rising too rapidly because of the housing shortage, and this lack of inventory is preventing home sales growth potential.”

In September, the median price for an existing home was $272,100, a gain of 5.9% from last year’s rate of $256,900. This marks the 91st straight month of year-over-year gains.

According to NAR, total homes available for sale remained on par with August’s 1.83 million but fell 2.7% from last year’s rate of 1.88 million.

There was a 4.1-month supply of unsold inventory at the current sales pace, up from 4 in August, but down from and 4.4 a year ago. Properties stayed on the market an average of 32 days in September, rising from 31 days in August but remaining the same as last year. The report states that 49% of homes stayed on the market for less than a month.

The average commitment rate for a 30-year, conventional, fixed-rate mortgage fell from 3.62% in August to 3.61% in September and the average commitment rate for all of 2018 was 4.54%, according to Freddie Mac.

“For families on the sidelines thinking about buying a home, current rates are making the climate extremely favorable in markets across the country,” said NAR President John Smaby. “These traditionally low rates make it that much easier to qualify for a mortgage, and they also open up various housing selections to buyers everywhere.”

First-time buyers comprised 33% of sales in September, up from August’s rate of 31% and September 2018’s rate of 32%. NAR revealed that the annual share of first-time buyers held steady at 33%.

Single-family home sales retreated from a seasonally adjusted annual rate of 4.91 million in August to 4.78 million in September, which is 3.9% above a year ago. The median existing single-family home price was $275,100 in August, increasing 6.1% from September 2018. 

Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 600,000 units in September, which is 1.7% above August’s rate, but 3.44% higher than a year ago. The median existing condo price was $248,600 in September, increasing 4.5% from 2018. 

Here’s a regional breakdown of the nation’s existing-home sales:

  • Existing home sales in the Northeast dropped 3.1% from the prior month’s rate to an annual rate of 690,000, which is a 1.5% annual increase. The median price in the Northeast increased by 5.2% from September 2018 and came in at $301,100.
  • In the Midwest, existing home sales fell 3.1% from the prior month at an annual rate of 1.27 million, which is about equivalent to September 2018’s level. The median price in the Midwest was $213,500, increasing 7.2% from a year ago.
  • Southern existing home sales declined 2.1% to an annual rate of 2.28 million in September, up 6% from last year. The median price in the South rose to $403,600, increasing 4.5% from September 2018.
  • Existing home sales in the West decreased by 0.9% to an annual rate of 1.14 million in September, which is 5.6% above last year’s rate. The median price in the West was $403,600, climbing 4.5% from this time last year.

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