September Existing Home Sales Soar to 14-Year High

Existing home sales jumped for the fourth consecutive month in September, the National Association of Realtors reported yesterday, reaching their highest level since 2006.

The report said total existing home sales ( rose by 9.4% from August to a seasonally adjusted annual rate of 6.54 million. Sales jumped by 20.9% from a year ago (5.41 million).

Single-family home sales rose to a seasonally adjusted annual rate of 5.87 million in September, up by 9.7% from 5.35 million in August and by 21.8% from one year ago. The median existing single-family home price rose to $316,200 in September, up 15.2% from September 2019. Existing condominium and co-op sales rose to a seasonally adjusted annual rate of 670,000 units in September, up 6.3% from August and 13.6% from a year ago. The median existing condo price rose $272,700 in September, an increase of 9.9% from a year ago.

For four straight months, home sales have grown in every region compared to the previous month. Median home prices increased at double-digit rates in each of the four major regions from one year ago. In the Northeast, sales jumped by 16.2% to 860,000 units, seasonally annually adjusted, and rose by 22.9% increase from a year ago. The median price in the Northeast rose to $354,600, up 17.8% from a year ago.

Sales rose by 7.1% in the Midwest to an annual rate of 1,510,000 in September and improved by 19.8% from a year ago. The median price in the Midwest rose to $243,100, a 14.8% increase from a year ago.

Sales in the South increased by 8.5% to an annual rate of 2.80 million in September and improved by 22.3% from a year ago. The median price in the South rose to $266,900, a 13.0% increase from a year ago.

Sales in the West rose by 9.6% to an annual rate of 1,370,000 in September and improved by 18.1% from a year ago. The median price in the West rose to $470,800, up 17.1% from a year ago.

“Existing-home sales jumped in September, rising to their fastest pace since before the financial crisis, and up more than 20 percent compared to last year,” said Mike Fratantoni, Chief Economist with the Mortgage Bankers Association. Contributing to this surge in sales activity is an improving job market, low rates and families across the country looking for more – or different – space.”

Fratantoni said the primary constraint to even more sales is the plummeting inventory of homes on the market, which is leading to bidding wars and spikes in home prices across the country. “Fortunately, we are seeing a pickup in the pace of construction, which should bring more inventory onto the market for next year’s buyers,” he said. “This positive report aligns with MBA’s 2021 forecast for a record year of purchase originations.”

Fratantoni noted typical seasonal patterns for home sales have likely been thrown off as a result of the coronavirus pandemic and economic crisis. “Sales that would have normally occurred in the summer have likely been pushed into the fall, and this may account for some of the extremely fast pace of existing sales on a seasonally adjusted basis,” he said.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said demand for homes is likely even stronger, with low inventories fueling competition and pulling prices higher.”

“Homes are selling incredibly fast,” Vitner said. “Nearly every housing metric has been remarkably strong for the past few months as pending home sales and mortgage purchase applications pointed to a particularly strong gain in September.”

Vitner noted home sales typically taper off at the start of the school year. “This year, however, lower mortgage rates, the increased desire for more living spaces and fewer distractions than usual, given the lack of live events, travel and entertainment options available have provided home buyers more buying power and a little more time to shop,” he said. “We expect sales to remain strong in October. Home sales would likely be stronger if there were more homes available for sale.”

NAR Chief Economist Lawrence Yun agreed. “Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” he said. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

NAR reported the median existing home price for all housing types in September jumped to $311,800, up 14.8% from a year ago ($271,500), as prices rose in every region. September’s national price increase marks 103 straight months of year-over-year gains.

Total housing inventory at the end of September totaled just 1.47 million units, down by 1.3% from August and down by 19.2% from one year ago (1.82 million). Unsold inventory sits at a 2.7-month supply at the current sales pace, down from 3.0 months in August and down from the 4.0-month figure recorded a year ago.

“There is no shortage of hopeful, potential buyers, but inventory is historically low,” Yun said. “To their credit, we have seen some homebuilders move to ramp up supply, but a need for even more production still exists.”

NAR said sales in vacation destination counties have seen a strong acceleration since July, with a 34% year-over-year gain in September.

“The uncertainty about when the pandemic will end coupled with the ability to work from home appears to have boosted sales in summer resort regions, including Lake Tahoe, mid-Atlantic beaches (Rehoboth Beach, Myrtle Beach), and the Jersey shore areas,” Yun said.

The report said properties typically remained on the market for 21 days in September – a record low – seasonally down from 22 days in August and down from 32 days in September 2019. Seventy-one percent of homes sold in September were on the market for less than a month.

First-time buyers were responsible for 31% of sales in September, down from 33% in both August and a year ago. Individual investors or second-home buyers purchased 12% of homes in September, a small decline from the 14% figure recorded in both August and a year ago. All-cash sales accounted for 18% of transactions in September, unchanged from August but up from 17% a year ago.

Distressed sales represented less than 1% of sales in September, equal to August’s percentage but down from 2% a year ago.