Existing home sales show some growth in September

The pace of existing home sales in the United States showed some monthly growth for the first time since May, according to the National Association of Realtors' report on existing home sales for September. However, the rate of sales was also down from the previous year.

The National Association of Realtors determined that the seasonally adjusted annual rate of existing home sales for September stood at 5.39 million. This was up 0.7 percent from August, but 1.5 percent below the pace for September 2016. The pace was the second slowest for the year, behind the August figure of 5.35 million.

Lawrence Yun, chief economist for the National Association of Realtors, said the impact of Hurricanes Harvey and Irma contributed to lower sales activity in the South. However, he also said buyers have confronted persistent challenges in home affordability.

"Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country," said Yun. "Realtors this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings—especially at the lower end of the market—and fast-rising prices that are straining the budgets of prospective buyers."

The median price for an existing home sold in September was $245,100. This was up 4.2 percent from September 2016, making it the 67th consecutive month of year-over-year price gains.

Single-family homes had a median sales price of $246,800, a year-over-year increase of 4.2 percent. The seasonally adjusted annual rate of sales of this type of property was up 1.1 percent from August to 4.79 million, but this pace was down 1.2 percent from September 2016.

Condominium and co-op transactions slowed in September, with their sales pace falling 1.6 percent from the previous month and 3.2 percent from the previous year to a seasonally adjusted annual rate of 600,000 units. The median sales price for this type of housing rose 4.1 percent from September 2016 to $231,300.

While Yun said higher prices were still a concern, he also noted that the year-over-year price growth in September was at its lowest point since December 2016. In that month, median home prices were up 4.5 percent from the previous year. Yun said slowing price growth could potentially help buyers who have been stymied by higher asking prices on available properties.

Mortgage rates also continued to recede. According to Freddie Mac, the average commitment rate on a 30-year fixed rate mortgage fell to 3.81 percent in September, the lowest since a rate of 3.77 percent in November 2016. The average commitment rate in 2016 as a whole was 3.65 percent.

The inventory of existing homes for sale was down from the previous year for the 28th straight month. A total of 1.9 million homes were available for purchase in September, up 1.6 percent from August but down 6.4 percent from September 2016.

The typical existing home sold in September had been on the market for 34 days. This was four days slower than the previous month, but five days faster than the previous year. Forty-eight percent of the homes sold in September found a buyer in less than a month.

Buyers who were purchasing their first home accounted for just 29 percent of existing home sales in September. This share fell below 31 percent in the previous month, 34 percent in September 2016, and 35 percent in 2016 as a whole to reach its lowest point in two years.

"Nearly two-thirds of renters currently believe now is a good time to buy a home [according to the National Association of Realtors' third quarter HOME survey], but weakening affordability and few choices in their price range have made it really difficult for more aspiring first-time buyers to reach the market," said Yun.

Individual investor activity remained unchanged, with these buyers accounting for 15 percent of existing home sales in September – the same as both August and September 2016. Investors often purchase homes without financing, and 20 percent of September's sales were made with cash; this share was the same as in August, but down from 21 percent in September 2016.

Just 4 percent of sales were distressed properties, unchanged from the previous month and previous year. Three percent of existing homes sold in September were foreclosures, while 1 percent were short sales.

In the Northeast, the annual rate of 720,000 sales was unchanged from August but down 1.4 percent from the previous year. The median sales price during the month was $274,100, up 4.8 percent from the previous year.

The annual rate of 1.3 million existing home sales in the Midwest was up 1.6 percent from August, but 1.5 percent below the pace of September 2016. The median price of an existing home sold in the region was $195,800, a year-over-year increase of 5.4 percent.

The annual rate of 1.24 million sales in the West was unchanged from August, but climbed 3.3 percent from September 2016. An existing home sold in September in this region had a median price of $362,700, up 5 percent from September 2016.

In the South, existing home sales ticked down 0.9 percent from the previous month and 2.3 percent from the previous year to an annual rate of 2.13 million. The median sales price for September was $215,100, a year-over-year increase of 4.6 percent.

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