First-time buyers drove existing-home sales
After two months of declining, existing-home sales rebounded emphatically in September, signaling that the housing market recovery is on track. The jump in sales of previously-owned homes was propelled in significant part by first-time buyers who comprised a 34 percent share of sales volume– a portion not seen since 2012.
The National Association of Realtors (NAR) has reported that sales of existing homes in September rose 3.2 percent to a seasonally adjusted annual rate of 5.47 million, up 0.6 percent from a year ago and up from a downwardly revised 5.30 million rate in August.
Sales picked up in every region of the US despite persistent shortages of housing supply. While total inventory grew a slight 1.5 percent to 2.04 million homes at the end of September, that figure is still 6.8 percent lower compared to the previous year. In fact, total inventory has fallen year-over-year for 16 consecutive months.
The constriction of supply, which has been exacerbated by institutional investors snapping up properties for rent as well as lackluster housing starts, drove up median prices for existing homes 5.6 percent to $234,200 in September. Fortunately, solid job gains, rising incomes, and low mortgage rates have lured first-time purchasers into the market.
Moreover, move-up buyers and home-owning families tend to finalize purchases before the start of the school year. This has created extra breathing room in the market for first-time buyers at this point in the year.
“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,” Lawrence Yun, NAR chief economist, said. “Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month.”
In order to maintain strong levels of first-time home purchases, NAR president Tom Salomone has called on Fannie Mae and Freddie Mac to ensure that there is ample access to mortgage credit.
Regional Breakdown of Existing-Home Sales
- Existing-home sales in the Northeast jumped 5.7 percent to an annual rate of 740,000. Median home price grew 2.1 percent year-over-year to $261,600.
- The Midwest saw sales increase 3.9 percent to an annual rate of 1.32 million. Median price grew 5.9 percent year-over-year to $184,500.
- In the South, sales increased 0.9 percent to an annual rate of 2.16 million. Median price reached $204,000, representing a 6.6 percent year-over-year increase.
- Finally, existing-home sales in the West spiked 5.0 percent to an annual rate of 1.25 million. Median price also jumped 8.1 percent year-over-year to $345,400.