National Association of Realtors
20 October 2017
After three straight monthly declines, existing-home sales slightly reversed course in September, but ongoing supply shortages and recent hurricanes muted overall activity and caused sales to fall back on an annual basis, according to the National Association of Realtors®.
Total existing-home sales1, https://www.nar.realtor/existing-home-sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.7 percent to a seasonally adjusted annual rate of 5.39 million in September from 5.35 million in August. Last month’s sales pace is 1.5 percent below a year ago and is the second slowest over the past year (behind August).
Lawrence Yun, NAR chief economist, says closings mustered a meager gain in September, but declined on an annual basis for the first time in over a year (July 2016; 2.2 percent). “Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country,” he said. “Realtors® this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings – especially at the lower end of the market – and fast-rising prices that are straining the budgets of prospective buyers.”
Added Yun, “Sales activity likely would have been somewhat stronger if not for the fact that parts of Texas and South Florida – hit by Hurricanes Harvey and Irma – saw temporary, but notable declines.”
The median existing-home price2 for all housing types in September was $245,100, up 4.2 percent from September 2016 ($235,200). September’s price increase marks the 67th straight month of year-over-year gains.
Total housing inventory3 at the end of September rose 1.6 percent to 1.90 million existing homes available for sale, but still remains 6.4 percent lower than a year ago (2.03 million) and has fallen year-over-year for 28 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.5 months a year ago.
“A continuation of last month’s alleviating price growth, which was the slowest since last December (4.5 percent), would improve affordability conditions and be good news for the would-be buyers who have been held back by higher prices this year,” said Yun.
First-time buyers were 29 percent of sales in September, which is down from 31 percent in August, 34 percent a year ago and matches the lowest share since September 2015. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35 percent.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 3.81 percent in September from 3.88 percent in August and is the lowest since November 2016 (3.77 percent). The average commitment rate for all of 2016 was 3.65 percent.
“Nearly two-thirds of renters currently believe now is a good time to buy a home, but weakening affordability and few choices in their price range have made it really difficult for more aspiring first-time buyers to reach the market,” said Yun.
President William E. Brown, a Realtor® from Alamo, California, says Congress should keep in mind the barriers affecting prospective first-time buyers as they move forward with tax reform in the coming months.
“There’s no way around the fact that any proposal that marginalizes the mortgage interest deduction and eliminates state and local tax deductions essentially disincentives homeownership and is a potential tax hike on millions of middle-class homeowners,” said Brown. “Reforming the tax code is a worthy goal, but it should not lead to the middle class, who primarily build wealth through owning a home, footing the bill. Instead, Congress should be looking at ways to ensure more creditworthy prospective buyers are able to achieve homeownership and enjoy its personal and wealth-building benefits.”
Properties typically stayed on the market for 34 days in September, which is up from 30 days in August but down from 39 days a year ago. Forty-eight percent of homes sold in September were on the market for less than a month.
Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in September were San Francisco-Oakland-Hayward, Calif., 30 days; San Jose-Sunnyvale-Santa Clara, Calif., 32 days; Salt Lake City, Utah, 35 days; and Seattle-Tacoma-Bellevue, Wash., and Vallejo-Fairfield, Calif., both at 36 days.
All-cash sales were 20 percent of transactions in September, unchanged from August and down from 21 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in September (unchanged from last month and a year ago).
Distressed sales5 – foreclosures and short sales – were 4 percent of sales in September, unchanged from last month and a year ago. Three percent of September sales were foreclosures and 1 percent were short sales.
Single-family home sales climbed 1.1 percent to a seasonally adjusted annual rate of 4.79 million in September from 4.74 million in August, but are still 1.2 percent under the 4.85 million pace a year ago. The median existing single-family home price was $246,800 in September, up 4.2 percent from September 2016.
Existing condominium and co-op sales decreased 1.6 percent to a seasonally adjusted annual rate of 600,000 units in September, and are now 3.2 percent below a year ago. The median existing condo price was $231,300 in September, which is 4.1 percent above a year ago.
September existing-home sales in the Northeast were at an annual rate of 720,000 (unchanged from August), and are now 1.4 percent below a year ago. The median price in the Northeast was $274,100, which is 4.8 percent above September 2016.
In the Midwest, existing-home sales rose 1.6 percent to an annual rate of 1.30 million in September, but are 1.5 percent below a year ago. The median price in the Midwest was $195,800, up 5.4 percent from a year ago.
Existing-home sales in the South slipped 0.9 percent to an annual rate of 2.13 million in September, and are now 2.3 percent lower than a year ago. The median price in the South was $215,100, up 4.6 percent from a year ago.
Existing-home sales in the West increased 3.3 percent to an annual rate of 1.24 million in September (unchanged from a year ago). The median price in the West was $362,700, up 5.0 percent from September 2016.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
3Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
4Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.
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