Existing Home Sales Decline; Prices Rise for Seventh Consecutive Month

Existing home sales declined slightly in September, but the national median home price rose as inventories tightened.  The National Association of Realtors® said that completed transactions of single-family homes, townhomes, condos, and co-ops were down 1.7 percent to a seasonally adjusted rate of 4.75 million units in September.  August sales were revised upward from 4.82 million to 4.83 million.  The September number is 11.0 percent higher than existing home sales in September 2011 which were at an annual rate of 4.28 million.

The national median existing home price increased on an annual basis for the seventh consecutive month to $184,900.  This was 11.3 percent above the September 2011 median of $165,300.  The last time there were seven consecutive year-over-year increases was from November 2005 to May 2006.  The average home price was $232,000 in September 2012 compared to $228,000 in September 2011.

Single family home sales were also down slightly, from 4.29 million in August to 4.21 million in September, a decrease of 1.9 percent but remained 10.8 percent higher than one year earlier.  The median single family home price was $184,300, up 11.4 percent on an annual basis from $165,400 one year earlier.

Lawrence Yun, NAR chief economist, said the market trend is up.  "Despite occasional month-to-month setbacks, we're experiencing a genuine recovery," he said.  "More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest.  Rather, inventory shortages are limiting sales, notably in parts of the West."

Condo/townhouse and condo sales were flat at a rate of 540,000 units, the same as August but up from 480,000 units in September 2011.  The median price was $181,000, 10.0 percent higher than the median price of $164,500 one year earlier.

Distressed properties took a slightly higher share of sales in September.  Foreclosure sales accounted for 13 percent of sales and 11 percent were short sales.  Twenty-two percent of sales were of distressed properties in August and 30 percent in September 2011.  Foreclosures sold for an average discount of 21 percent from market value in August and short sales were discounted 13 percent.

Inventories were down by 3.3 percent in September to 2.32 million existing homes, a 5.9 month supply at the current pace of sales.  There was a 6.0 month supply in August.  Listed inventory is 20.0 percent lower than one year ago when there was an 8.1 month supply. 

Median marketing time was 70 days in both August and September but a big improvement from a year earlier when the median time on market for an existing home was 101 days.  Thirty-two percent of homes sold in the first month while 19 percent were on the market for six months or more.

 "The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production," Yun said.

Thirty-two percent of buyers were first-time purchasers in September, a number that has remained relatively constant over the last year.  Historically first-timers have represented about 40 percent of the market.  Investors purchased 18 percent of homes, again a relatively constant number, and 28 percent of transactions in September were all cash compared to 30 percent a year earlier.  Investors account for most cash sales.

Regionally, existing-home sales in the Northeast fell 6.3 percent to an annual level of 590,000 in September but are 7.3 percent above September 2011.  The median price in the Northeast was $238,700, up 4.1 percent from a year ago.

Existing-home sales in the Midwest slipped 0.9 percent in September to a pace of 1.10 million but are 19.6 percent higher than a year ago.  The median price in the Midwest was $145,200, up 7.0 percent from September 2011.

In the South, existing-home sales increased 0.5 percent to an annual level of 1.93 million in September and are 14.2 percent above September 2011.  The median price in the region was $163,600, up 13.1 percent from a year ago.

Existing-home sales in the West fell 3.4 percent to an annual pace of 1.13 million in September but are 0.9 percent above a year ago.  With continuing inventory shortages in the region, the median price in the West was $246,300, which is 18.4 percent higher than September 2011.