The latest existing home sales index from the National Association of Realtors fell by 1.9% to a seasonally adjusted annual rate of 5.29 million in September from a downwardly revised 5.39 million in August, but sales 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. Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown,’ he explained.
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 on year increases.
Distressed homes, that is 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.
The data also showed that 9% 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, the 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 five 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, said that 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 pointed out.
Thomas said flood insurance is also 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 cancelled due to concerns over rising insurance rates,’ he explained. Notably higher flood insurance rates went into effect on 01 October and could impact future sales in flood zones, he added.
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. Some 39% 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 % 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 some 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.
