September Existing Home Sales at Three-Year Low

Existing home sales disappointed again in September, falling for the sixth consecutive month to their lowest level since 2015, the National Association of Realtors said Friday.

The report said total existing home sales fell by 3.4 percent from August to a seasonally adjusted rate of 5.15 million in September. Sales also fell by 4.1 percent from a year ago (5.37 million in September 2017).

Single-family home sales fell to a seasonally adjusted annual rate of 4.58 million in September, down from 4.74 million in August, and down by 4.0 percent from a year ago. The median existing single-family home price rose to $260,500 in September, up 4.6 percent from a year ago.

Existing condominium and co-op sales fell to a seasonally adjusted annual rate of 570,000 units in September, down by 3.4 percent from last month and 5.0 percent from a year ago. The median existing condo price rose to $239,200 in September, up 1.5 percent from a year ago.

Sales fell or stagnated in every region. Sales in the Northeast decreased by 2.9 percent to an annual rate of 680,000, 5.6 percent below a year ago. The median price in the Northeast rose to $286,200, up 4.1 percent from September 2017.

In the Midwest, sales remained unchanged at an annual rate of 1.28 million in September, but down 1.5 percent from a year ago. The median price in the Midwest rose to $200,200, up 1.9 percent from last year.

Sales in the South decreased by 5.4 percent to an annual rate of 2.11 million in September, down from 2.12 million a year ago. The median price in the South rose to $223,900, up 3.0 percent from a year ago.

In the West, sales fell by 3.6 percent to an annual rate of 1.08 million in September, 12.2 percent below a year ago. The median price in the West rose to $388,500, up 4.1 percent from September 2017.

“Existing home sales track closings, which tend to reflect contracts signed one to two months earlier, so the most recent drop is not likely related to disruptions from Hurricane Florence,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Unfortunately, the slide in housing is the real deal. Virtually every leading indicator of housing demand has been trending lower for several months, including pending home sales, mortgage purchase applications and the proportion of consumers stating that now is a good time to buy a home.”

Vitner said the slide in home buying has coincided with rising mortgage rates and follows years of rapid price increases, which have collectively taken a toll on affordability. “Most of the drop in affordability this year, however, has come from rising mortgage rates,” he said. “The latest housing affordability data do not reflect the most recent run-up in rates, which has sent a further chill through mortgage purchase applications.”

NAR Chief Economist Lawrence Yun said rising interest rates are having a strong effect on sales. “A decade’s-high mortgage rates are preventing consumers from making quick decisions on home purchases,” he said. “All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

NAR reported the median existing-home price for all housing types in September rose to $258,100, up 4.2 percent from a year ago, marking the 79th straight month of year-over-year gains.

Total housing inventory at the end of September decreased from 1.91 million in August to 1.88 million existing homes available for sale, but is up from 1.86 million a year ago. Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.3 last month and 4.2 months a year ago.

The report said properties typically stayed on the market for 32 days in September, up from 29 days in August but down from 34 days a year ago. Forty-seven percent of homes sold in September were on the market for less than a month.

“There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory,” said Yun. “Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year.”

NAR said first-time buyers represented 32 percent of sales in September, up from last month (31 percent) and a year ago (29 percent). All-cash sales accounted for 21 percent of transactions in September, up from August and a year ago (both 20 percent). Individual investors purchased 13 percent of homes in September, unchanged from August and down from 15 percent a year ago.

Distressed sales represented 3 percent of sales in September (the lowest since NAR began tracking in October 2008), unchanged from last month and down from 4 percent a year ago. Two percent of September sales were foreclosures and 1 percent were short sales.

“We suspect the housing market will cool even further in coming months,” Vitner said. “Virtually every leading indicator of housing has weakened in recent months and interest rates have risen further. International buyers have also pulled back, and tax law changes have created another hurdle for potential buyers.”