Home Resales Rebound as Price 'Moderation', Low Rates Fuel More Closings

Sales of existing homes showed renewed strength in September following a disappointing and surprising decline in August, but have now increased year–over–year for 12 consecutive months, according to the latest updated from the National Association of Realtors.

Total home resales, representing completed transactions that include single–family homes, townhomes, condominiums and co–ops, jumped 4.7 percent to a seasonally adjusted annual rate of 5.55 million in September. That’s down slightly farom a downwardly revised 5.30 million in August, and are now 8.8 percent above a year ago (5.10 million).
“September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007 (5.79 million),” said Lawrence Yun, NAR chief economist. “While current price growth around 6 percent 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.”
Yun says that “a slight moderation in home prices in some markets” — along with mortgage rates remaining below 4 percent — enabled more households to close on a home last month. Fixed–rate mortgages have remained below 4 percent for a second consecutive month in October.
The median existing–home price for all housing types in September was $221,900, which is 6.1 percent above September 2014 ($209,100). September’s price increase marks the 43rd consecutive month of year–over–year gains.
Total housing inventory at the end of September decreased 2.6 percent to 2.21 million existing homes available for sale, and is now 3.1 percent 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 percent of sales in September after climbing to their highest share of the year in August (32 percent). A year ago, first–time buyers represented 29 percent of all buyers.
All–cash sales rose to 24 percent of transactions in September (22 percent in August) and are unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in September, up from 12 percent in August but down from 14 percent a year ago. Sixty–seven percent of investors paid cash in September.

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