September Existing Home Sales Jump 7%

Existing home sales came roaring back in September, rising by 7 percent with all four regions posting strong monthly gains, the National Association of Realtors reported Thursday.

The report said total existing-home sales ( rose to a seasonally adjusted annual rate of 6.29 million in September. However, sales fell by 2.3% from a year ago (6.44 million).

Single-family home sales rose to a seasonally adjusted annual rate of 5.59 million in September, up 7.7% from 5.19 million in August but down 3.1% from one year ago. The median existing single-family home price rose to $359,700 in September, up 13.8% from a year ago. Existing condominium and co-op sales rose to a seasonally adjusted annual rate of 700,000 units in September, up 1.4% from 690,000 in August and up 4.5% from one year ago. The median existing condo price was $297,900 in September, an annual increase of 9.3%.

Regionally, sales improved month over month but declined year over year. Sales in the South jumped by 8.6% in September to an annual rate of 2,770,000 but were unchanged from one year ago. The median price in the South rose to $307,500, a 14.8% rise from one year ago. Sales in the West rose by 6.5% to an annual rate of 1,310,000 in September, but fell by 3% from one year ago. The median price in the West rose to $506,300, up 8.3% from a year ago.

Sales in the Northeast rose by 5.5% in September to an annual rate of 770,000, but fell by 8.3% from a year ago. The median price in the Northeast rose to $387,200, up 9.2% from one year ago. Sales in the Midwest rose by 5.1% to an annual rate of 1,440,000 in September, but fell by 2.7% from a year ago. The median price in the Midwest rose to $265,300, a 9.1% increase from a year ago.

“The gain in existing home-sales in September reflects contracts signed earlier in the summer,” said Mike Fratantoni, Chief Economist with the Mortgage Bankers Association. MBA’s purchase application data showed an 8% gain in September, which is evidence of growing demand for buying a home and supports further sales increases in the months ahead. “

Fratantoni said MBA expects new home construction to help support growing inventory levels into 2022, which will lead to a deceleration in home-price growth. “Demand is strong and wage growth is healthy, and first-timers will have better chances to reach the market as inventory increases,” he said.

“The affordability migration continues to drive sales in the South and Mountain West,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “The influx of buyers into the South and Mountain West from areas with much higher home prices, particularly the Northeast and West Coast, is pulling median home prices up sharply in these areas”

Vitner said existing home sales appear to be heating up just as the weather starts to cool down. “The monthly gain was broad-based, with sales of single-family homes (7.7%) and condominiums and co-ops (1.4%) rising notably,” he said. “The robust upturn in overall sales was presaged by a recent surge in pending home sales, which leads existing sales by one or two months. September’s outsized gain, however, easily bested consensus expectations and more than makes up for the modest decline registered in August.”

Vitner also noted existing homes continue to sell quickly. “Low inventories, intense competition and fast-rising prices have left many buyers discouraged, especially first-time buyers who are more sensitive to rising prices,” he said. “Disheartened buyers are still remaining vigilant in their search for a home to purchase, and homes that are put on the market do not last very long…Despite affordability concerns, overall buying conditions remain relatively favorable, which should support a sturdy pace of sales in the months ahead.

“Some improvement in supply during prior months helped nudge up sales in September,” said Lawrence Yun, NAR’s chief economist. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.”

The report said total housing inventory at the end of September fell to 1.27 million units, down 0.8% from August and down 13% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the present sales pace, down 7.7% from August and down from 2.7 months a year ago.

The median existing home price for all housing types in September rose to $352,800, up 13.3% from a year ago ($311,500), as prices rose in each region. This marks 115 straight months of year-over-year increases.

“As mortgage forbearance programs end, and as homebuilders ramp up production – despite the supply-chain material issues – we are likely to see more homes on the market as soon as 2022,” Yun said.

The report said properties typically remained on the market for 17 days in September, unchanged from August and down from 21 days a year ago. Eighty-six percent of homes sold in September 2021 were on the market for less than a month.

First-time buyers accounted for 28% of sales in September, down from 29% in August and 31% a year ago. “First-time buyers are hit particularly hard by the historically high home prices as they largely do not have the savings required to buy a home or equity to offset such a purchase,” Yun said.

Individual investors or second-home buyers purchased 13% of homes in September, down from 15% in August but up from 12% in September 2020. All-cash sales accounted for 23% of transactions in September, up from both 22% in August and from 18% in September 2020.

Distressed sales – foreclosures and short sales – represented less than 1% of sales in September, equal to the percentage seen a month prior and equal to a year ago.

With inventory at only 2.4 months’ supply, and median home prices increasing nationally at 13%, it was not surprising to see the first-time homebuyer share of the market drop again to 28%,” Fratantoni said. “Depressed inventory levels continue to constrain the market, but MBA still forecasts for existing sales to come in at an annualized pace of 6.07 million this year – a 7% increase from 2020.”