Existing home sales in the United States rebounded strongly in September, boosted by more first time buyers numbers which reached their highest levels for over four years.
All major regions saw an increase in completed sales after a two month slump and distressed sales fell to a new low of 4%, according to the latest index from the National Association of Realtors (NAR).
Prices also continued upwards with the index showing that the median prices in September was $234,000, up 5.6% compared to a year ago and the 55th month in a row of year on year growth.
Total sales increased by 3.2% to a seasonally adjusted annual rate of 5.47 million in September from a downwardly revised 5.3 million in August. After last month’s gain, sales are at now at their highest pace since June and are 0.6% 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.
‘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 home owners to buy last month,’ he added.
The data also shows that total housing inventory at the end of September rose 1.5% to 2.04 million existing homes available for sale, but is still 6.8% lower than a year ago and has now fallen year on year for 16 months in a row. 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. Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand,’ Yun explained.
Matching the highest share since July 2012, first time buyers accounted for 34% of sales in September, up from 31% in August and 29% a year ago. First time buyers represented 30% of sales in all of 2015.
‘There’s hope the leap in sales to first time buyers can stick through the rest of the year and into next spring. 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,’ Yun added.
Distressed sales fell to a new low of 4% in September, down from 5% in August and 7% a year ago while 3% of September sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 15% below market value while short sales were discounted 11%.
Properties typically stayed on the market for 39 days in September, up from 36 days in August but down considerably from a year ago when it was 49 days. Short sales were on the market the longest at a median of 118 days in September, while foreclosures sold in 67 days and non-distressed homes took 38 days and 44% of homes sold in September were on the market for less than a month.
All-cash sales were 21% of transactions in September, down from 22% in August and 24% a year ago. Individual investors, who account for many cash sales, purchased 14% of homes in September, up from 13% both in August and a year ago and 65% of investors paid in cash in September.
A breakdown of the index figures show that single family home sales increased 4.1% to a seasonally adjusted annual rate of 4.86 million in September and are now 0.6% above the 4.83 million pace a year ago. The median existing single family home price was $235,700 in September, up 5.6% from September 2015.
Existing condominium and co-op sales fell by 3.2% to a seasonally adjusted annual rate of 610,000 units in September and are unchanged from a year ago. The median existing condo price was $222,100 in September, which is 6.1% above a year ago.
A regional breakdown shows that existing home sales in the Northeast were up by 5.7%, unchanged from a year ago and the median price was $261,600, up 2.1% from September 2015.
In the Midwest, existing home sales were up 3.9% and are now 2.3% above a year ago. The median price in the Midwest was $184,500, up 5.9% year on year.
Existing home sales in the South in September increased by 0.9% but are still 0.9% below September 2015. The median price in the South was $204,000, up 6.6% from a year ago.
In the West existing home sales rose by 5% and are now 1.6% higher than a year ago. The median price in the West was $345,400, up 8.1% from September 2015.
