Existing Home Sales Level Off; Prices Drop From Last Month
Even though sales of existing homes drifted off the record levels established in the previous two months, September sales were higher by double digits than a year earlier. The month was the 27th consecutive one in which prices were higher year-over-year.
The National Association of Realtors® said Monday that total existing home sales, including single-family homes, townhomes, condos, and cooperative apartments, declined 1.9 percent to a seasonally adjusted annualized rate of 5.29 million in September. August sales were originally reported at 5.48 million but today's adjustment wiped out the 1.7 percent reported increase that month, putting the revised August number at 5.39 million, unchanged from July. September sales were 10.7 percent higher than in September 2012 when the pace of sales was 4.78 million units.
Existing single-family homes sold at a seasonally adjusted annual rate of 4.68 million, down from 4.75 million in August but sales remain 10.9 percent higher than in September 2012. Condo and co-op sales were down 4.7 percent to 610,000 units from 640,000 units in August. This was 8.9 percent higher than sales a year earlier.
Lawrence Yun, NAR chief economist, said a decline was expected. "Affordability has fallen to a five-year low as home price increases easily outpaced income growth," he said. "Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown."
NAR President Gary Thomas said there are far-ranging consequences from the periodic stalemates in Washington. "Just one impact of the recent government shutdown - delays in tax transcripts needed for approval of mortgage loans - put a monkey wrench in the transaction process and could negatively impact sales closings in next month's report," he said.
Inventories remained low in some parts of the country NAR said, putting pressure on home prices which continue to rise. The national median existing-home price for all housing types was $199,200 in September, up 11.7 percent from September 2012 and the 10th consecutive month of double-digit year-over-year increases. The median existing single-family home price was $199,300, 11.4 percent higher than a year ago and the condo price was $198,600, up 14.2 percent from September 2012.
There were 2.21 million existing homes available for sale at the end of September. At the current level of sales this represents a 5.0 month supply, a slight uptick from August and 1.8 percent below the 5.4 month supply in September 2012.
Foreclosures accounted for 9 percent of September sales and short sales for 5 percent. The aggregate was up two percentage points from August when the 12 percent share for distressed property sales was the lowest since NAR began tracking them in October 2008. This lower share of distressed sales is in part responsible for the growth in median prices as is the shrinking discount on those sales. Foreclosures sold for an average discount of 16 percent below market and short sales were discounted 12 percent compared to 21 percent and 13 percent respectively a year ago.
NAR said some of the strongest increases in listing (as opposed to sale) prices from a year ago are in the Detroit area, up 44.6 percent; Las Vegas, up 30.7 percent; and Sacramento, up 28.9 percent.
Thomas expressed concern over the impact of flood insurance may have on home sales going forward. "Realtors® report that approximately 10 percent of transactions in September were located in flood zones, and that nearly one out of 10 of those transactions were delayed or canceled due to concerns over rising insurance rates." Notably higher flood insurance rates went into effect on October 1, and could impact future sales in flood zones.
First time buyers accounted for 28 percent of sales in September, the same as in August but down from 32 percent a year earlier. Thirty-three percent of sales were all cash, up 1 percentage point from August and 5 from the year before. Investors purchased 19 percent of homes compared to 17 percent in August and 18 percent in September 2012. Seventy-four percent of investor purchases in September were all cash.
The median time on market for all homes was 50 days in September, up from 43 days in August, but much faster than the 70 days on market in September 2012. Short sales were on the market for a median of 93 days, while foreclosures typically sold in 43 days, and non-distressed homes took 49 days. Thirty-nine percent of homes sold in September were on the market for less than a month.
Regionally, existing-home sales in the Northeast declined 2.8 percent to an annual rate of 690,000 in September, but are 15.0 percent above September 2012. The median price in the Northeast was $240,900, up 2.3 percent from a year ago.
Existing-home sales in the Midwest fell 5.3 percent to a pace of 1.25 million, but are 12.6 percent higher than a year ago. The median price in the Midwest was up 9.0 percent on an annual basis to $158,400.
In the South, existing-home sales declined 1.4 percent to an annual level of 2.10 million in September, but are 9.9 percent above September 2012. The median price in the South was $171,600, up 13.9 percent from a year ago.
Existing-home sales in the West rose 1.6 percent to a pace of 1.25 million in September, and are 7.8 percent higher than a year ago. With ongoing inventory restrictions, the median price in the West rose to $286,300, which is 16.8 percent above September 2012.