Thursday, October 20, 2016 / by Karen McGail
Existing-home sales rebounded in September as first-time home buyers flooded the market. Sales to first-time home buyers topped a 34 percent share in September, the highest in more than four years, according to the National Association of REALTORS®.
Total existing-home sales – which are completed transactions for single-family homes, townhomes, condos, and co-ops – rose 3.2 percent in September month-over-month to a seasonally adjusted annual rate of 5.47 million, NAR reported. Sales are now at the highest pace since June (5.57 million) and are 0.6 percent higher than a year ago (5.44 million). All major regions across the U.S. saw a pick up in closings last month, NAR reports.
Home Sales By Region
Here’s a closer look at how existing-home sales fared across the country in September:
- Northeast: existing-home sales rose 5.7 percent to an annual rate of 740,000, unchanged from a year ago. Median price: $261,600, up 2.1 percent from a year ago.
- Midwest: existing-home sales increased 3.9 percent to an annual rate of 1.32 million in September, and are now 2.3 percent above a year ago. Median price: $184,500, up 5.9 percent from a year ago.
- South: existing-home sales inched up 0.9 percent to an annual rate of 2.16 million, but remain 0.9 percent below a year ago. Median price: $204,000, up 6.6 percent from a year ago.
- West: existing-home sales surged 5 percent to an annual rate of 1.25 million in September, and are now 1.6 percent higher than a year ago. Median price: $345,400, up 8.1 percent from a year ago.
First-time home buyers were behind most of that sales momentum last month, NAR reports.
“There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring,” says Lawrence Yun, NAR’s chief economist. “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 home ownership rate.”
Still, the limited number of homes for sale on the market could prove a big roadblock.
“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,” Yun adds. “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 home owners to buy last month.”
5 Key Housing Stats
Here are a few key housing indicators from NAR’s September housing report:
1. Home prices: The median existing-home price for all housing types last month was $234,200, a 5.6 percent year-over-year increase.
2. Days on the market: Forty-four percent of homes sold in September were on the market for less than a month. Properties stayed on the market an average of 39 days last month, down from 49 days a year ago. Short sales spent the longest time on the market at a median of 118 days; foreclosures sold; and non-distressed homes sold .
3. Distressed sales: Foreclosures and short sales dropped to a new low in September, comprising 4 percent of sales. That is down from 7 percent a year ago. In September, 3 percent of sales were foreclosures and 1 percent were short sales. On average, foreclosures sold for a discount of 15 percent below market value while short sales were discounted 11 percent.
4. Cash sales: All-cash sales comprised 21 percent of transactions last month, down from 24 percent a year ago. Individual investors make up the biggest bulk of cash sales. They purchased 14 percent of homes in September, up from 13 percent a year ago.
5. Inventories: More housing stock was added to the market by the end of September, up 1.5 percent month-over-month, but inventories are still 6.8 percent lower than a year ago. Unsold inventory dropped to a 4.5-month supply at the current sales pace.
“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in,” Yun says. “Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand.”