After hitting the highest level in nearly four years, existing-home sales declined in September, but limited inventory conditions continued to pressure home prices in much of the country, according to the National Association of Realtors®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.9% to a seasonally adjusted annual rate of 5.29 million in September from a downwardly revised 5.39 million in August, but are 10.7% above the 4.78 million-unit pace in September 2012. Sales have remained above year-ago levels for the past 27 months.
Lawrence Yun, NAR chief economist, said a decline was expected. “Affordability has fallen to a five-year low as home price increases easily outpaced income growth,” he said. “Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.49% in September from 4.46% in August, and is the highest since July 2011 when it was 4.55%; the rate was 3.47% in September 2012.
The national median existing-home price for all housing types was $199,200 in September, up 11.7% from September 2012. This is the 10th consecutive month of double-digit year-over-year increases.
Distressed homes – foreclosures and short sales – accounted for 14% of September sales, up from 12% in August, which was the lowest share since monthly tracking began in October 2008; they were 24% in September 2012. Lower levels in the share of distressed sales account for some of the growth in median price.
Nine percent of September sales were foreclosures, and 5% were short sales. Foreclosures sold for an average discount of 16% below market value in September, while short sales were discounted 12%.
Data from realtor.com, NAR’s listing site, show some of the strongest increases in listing price from a year ago are in the Detroit area, up 44.6%; Las Vegas, up 30.7%; and Sacramento, up 28.9%.
Total housing inventory at the end of September was unchanged at 2.21 million existing homes available for sale, which represents a 5.0-month supply at the current sales pace, compared with a 4.9-month supply in August. Unsold inventory is 1.8% above a year ago, when there was a 5.4-month supply.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said there are far-ranging consequences from the repeating stalemates in Washington. “Just one impact of the recent government shutdown – delays in tax transcripts needed for approval of mortgage loans – put a monkey wrench in the transaction process and could negatively impact sales closings in next month’s report,” he said.
Thomas said flood insurance also is a concern. “Realtors® report that approximately 10% of transactions in September were located in flood zones, and that nearly one out of 10 of those transactions were delayed or canceled due to concerns over rising insurance rates.” Notably higher flood insurance rates went into effect on October 1, and could impact future sales in flood zones.
The median time on market for all homes was 50 days in September, up from 43 days in August, but much faster than the 70 days on market in September 2012. Short sales were on the market for a median of 93 days, while foreclosures typically sold in 43 days, and non-distressed homes took 49 days. Thirty-nine percent of homes sold in September were on the market for less than a month.
First-time buyers accounted for 28% of purchases in September, unchanged from August, but down from 32% in September 2012.
All-cash sales comprised 33% of transactions in September, up from 32% in August, and 28% in September 2012. Individual investors, who account for many cash sales, purchased 19% of homes in September, up from 17% in August, and 18% in September 2012. Last month, 74% of investors paid cash.
Single-family home sales slipped 1.5% to a seasonally adjusted annual rate of 4.68 million in September from 4.75 million in August, but are 10.9% above the 4.22 million-unit pace in September 2012. The median existing single-family home price was $199,300 in September, which is 11.4% higher than a year ago.
Existing condominium and co-op sales fell 4.7% to an annual rate of 610,000 units in September from 640,000 in August, but are 8.9% above the 560,000-unit level a year ago. The median existing condo price was $198,600 in September, up 14.2% from September 2012.
Regionally, existing-home sales in the Northeast declined 2.8% to an annual rate of 690,000 in September, but are 15.0% above September 2012. The median price in the Northeast was $240,900, up 2.3% from a year ago.
Existing-home sales in the Midwest fell 5.3% in September to a pace of 1.25 million, but are 12.6% higher than a year ago. The median price in the Midwest was $158,400, which is 9.0% above September 2012.
In the South, existing-home sales declined 1.4% to an annual level of 2.10 million in September, but are 9.9% above September 2012. The median price in the South was $171,600, up 13.9% from a year ago.
Existing-home sales in the West rose 1.6% to a pace of 1.25 million in September, and are 7.8% higher than a year ago. With ongoing inventory restrictions, the median price in the West rose to $286,300, which is 16.8% above September 2012.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.