Sales of existing homes rebounded in September

Sales of existing homes rebounded in September
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Sales of existing homes bounced back in September and were driven by a jump in purchases of first-time homebuyers.

Total sales, which are closings that include single-family homes and condominiums, jumped 3.2 percent to a seasonally adjusted annual rate of 5.47 million in September, up from 5.3 million in August, the National Association of Realtors (NAR) said on Thursday.

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After last month’s gain, sales are at their highest pace since June and are 0.6 percent above a year ago.

“The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale,” said Lawrence Yun, NAR chief economist. 

First-time buyers accounted for 34 percent of sales last month, matching the highest share since July 2012.

“There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring,” Yun said.

“The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate," he said. 

All major regions saw an increase in closings last month, and distressed sales fell to a new low of 4 percent of the market.

David Berson, chief economist at Nationwide, said the September increase reflects a strong demand for housing, which is being driven by “solid job gains, accelerating wages, rising household formations, and near record-low mortgage rates. All despite significant supply constraints.”

Housing inventory at the end of September rose 1.5 percent to 2.04 million homes for sale, but is still 6.8 percent lower than a year ago and has fallen year-over-year for 16 straight months.

Unsold inventory is at a 4.5-month supply at the current sales pace, which is down from 4.6 months in August.

“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in,” Yun said.

“Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand," he said.

The median existing-home price for all housing types in September was $234,200, up 5.6 percent from September 2015.

All-cash sales represented 21 percent of transactions in September, down from 22 percent in August.

Single-family home sales increased 4.1 percent to a seasonally adjusted annual rate of 4.86 million in September from 4.67 million in August.

Regionally, the biggest jumps were in the West and Northeast at 5 percent and 5.7 percent, respectively. Sales increased 3.9 percent in the Midwest and 0.9 in the South.