Existing-home sales reversed the downward trend recorded in August due to stock market declines, and rose 4.7 percent to a seasonally adjusted annual rates of 5.55 million in September, the highest pace since February 2007.
The National Association of Realtors (NAR) reported Thursday that September's rebound in existing-home sales marks a year-over-year increase for 12 consecutive months and all four major regions experienced gains.
Total existing–home sales, or completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 4.7 percent to a seasonally adjusted annual rate of 5.55 million in September, up from 5.30 million in August, and 8.8 percent above 5.10 million a year ago.
Consumers received an added boost of confidence to purchase a home from the slight moderation in home prices and low mortgage rates last month, says Lawrence Yun, NAR chief economist.
"While current price growth around 6 percent is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace," Yun said.
The biggest shock that the NAR reported was that the first-time buyer share declined from their highest share of the year at 32 percent in August to 29 percent in September, the same total recorded a year ago.
Realtor.com Chief Economist Jonathan Smoke noted that despite the decline, "we estimate from the monthly sales data this year that first-time buyers have been responsible for 45 percent of the growth in sales over last year. The September share decline may simply reflect more competition in September by repeat buyers whose closings slipped in August due to the stock market disruptions."
The median existing-home price for all housing types was $221,900 in September, 6.1 percent above the $209,100 recorded during the same period last year September 2014. NAR's report said that this increase marks the 43rd consecutive month of year-over-year gains.
Inventory fell 2.6 percent at the end of September to 2.21 million existing homes for sale, the report stated. This number is 3.1 percent lower than 2.28 million recorded a year ago. Unsold inventory also fell to a 4.8-month supply at the current sales pace, down from 5.1 months in August.
"Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent-up sellers realizing the increased equity they've gained from rising home prices and using it towards trading up or moving into a smaller home," Yun explained. "Unfortunately, first-time buyers are still failing to generate any meaningful traction this year."
Smoke added, "Tight supply is an impediment to future growth, and we are not seeing new construction grew enough to fill the void. As a result, we should expect to see tight supply remain a factor for the months and year ahead.”
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