Following two months of decreases, the pace of existing home sales accelerated significantly in September. The National Association of Realtors credited the change to an increase in first-time homebuyers, suggesting that many of these buyers were finally able to find a suitable property in a competitive market.

The number of existing home sales—defined as completed transactions involving single-family homes, condominiums, co-ops, and townhouses—stood at a seasonally adjusted annual rate of 5.47 million. This pace was up 3.2 percent from the downwardly revised pace of 5.3 million in August and 0.6 percent from September 2015. The figure was at its highest point since June, when the annual existing home sales rate reached 5.57 million.

The increase follows two months where existing sales fell from the previous month. The rate in August was 0.9 percent lower than in July, which saw a 3.2 percent decrease from June. However, each month also saw a year-over-year increase in existing sales – 0.8 percent in August and 1.6 percent in July.

Buyers who were purchasing their first home made up 34 percent of existing home transactions in September. This share was the highest since July 2012 and an increase from 31 percent in August and 29 percent in September 2015. First-time buyers accounted for 30 percent of all existing home sales in the entire year of 2015.

"The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale," said Lawrence Yun, chief economist at the National Association of Realtors. "Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month."

Buyers continued to face challenges with housing availability and affordability. Although the total number of existing homes for sale in September rose 1.5 percent from the previous month to 2.04 million, this supply was still 6.8 percent lower than in September 2015. The total housing inventory has experienced year-over-year declines for 16 consecutive months.

The median price for an existing home also increased for the 55th month in a row. A typical property sold for $234,200, up 5.6 percent from the median price of $221,700 in September 2015.

"Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in," said Yun. "Unfortunately, there won't be much relief from new home construction, which continues to be grossly inadequate in relation to demand."

Mortgage rates increased for the first time in six months, but were still lower than last year. The average commitment rate for a 30-year conventional fixed-rate mortgage, according to Freddie Mac, rose from 3.44 percent in August to 3.46 percent in September. In 2015, the average commitment rate was 3.85 percent.

Yun and Tom Salomone, president of the National Association of Realtors, both expressed the hope that the momentum of first-time buyers will continue to create a healthy level of home sales. Salomone said government-sponsored enterprises such as Freddie Mac and Fannie Mae should ensure that borrowers with good credit scores are able to have access to mortgages.

"Unfortunately, overly burdensome fees at the GSEs are making homeownership difficult for moderate income buyers," said Salomone. "Fannie and Freddie can reduce the cost of borrowing while still protecting taxpayers, and we're hopeful they'll take these steps to ensure prospective buyers are able to enter the market."

"There's hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring," said Yun. "The market fundamentals—primarily consistent job gains and affordable mortgage rates—are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate."

Single-family homes accounted for the bulk of existing home sales, with an annual rate of 4.86 million in September. This pace was up 4.1 percent from August and 0.6 percent from the previous year. The median price for an existing single-family home was $235,700, a year-over-year increase of 5.6 percent.

The annual rate of condominium and co-op sales stood at 610,000 units in September, unchanged from the previous year and down 3.2 percent from August. The median price for a condominium or co-op was $222,100, up 6.1 percent from September 2015.

Existing homes typically stayed on the market for 39 days before a sale, three days longer than in August but 10 days shorter than the same time in the previous year. Forty-four percent of the homes sold in September spent less than a month on the market.

Distressed sales fell to their lowest point since the National Association of Realtors began tracking them in October 2008, making up only 4 percent of all existing home sales in September. This share was down from 5 percent in August and 7 percent in September 2015.

Three percent of existing home sales in September were foreclosures. These properties typically sold in 67 days at 15 percent below market value, a steeper discount than the average of 12 percent in August.

Short sales made up only 1 percent of existing home sales. These properties had an average discount of 11 percent—down from 14 percent in August—and spent a median of 118 days on the market before a sale.

Twenty-one percent of existing home sales in September were purchased without financing, down from 22 percent in August and 24 percent in September 2015. Investors were most likely to skip financing, with 65 percent paying in cash. Fourteen percent of September's sales were made to individual investors, up 1 percentage point from both the previous month and previous year.

Home sales in the Northeast were unchanged from September 2015, but the annual rate of 740,000 was up 5.7 percent from August. The median price of an existing home in the region rose 2.1 percent from the previous year to $261,600.

The West continued to have the strongest year-over-year growth in home prices, which increased 8.1 percent to $345,400. The annual existing home sales rate in the region stood at 1.25 percent, up 5 percent from August and 1.6 percent from September 2015.

Existing home sales in the Midwest had an annual rate of 1.32 million, up 3.9 percent from August and 2.3 percent from the previous year. The median home price was $184,500, a year-over-year increase of 5.9 percent.

The South was the only region with some decline in existing home sales. The annual rate in the region was 2.16 million, down 0.9 percent from the previous year; however, the pace was still up 0.9 percent from August. The median home price in the region was $204,000, a 6.6 percent increase from September 2015.