On Thursday, October 20, 2016, the National Association of Realtors (NAR) reported that the existing-home sales in the U.S. economy jumped 3.2% in September from the previous month.
In September, sales of already-built single family homes, townhomes, condominiums, and co-ops were registered at an annual pace of 5.47 million, up from 5.30 million in August. The NAR also reported that existing-homes were at the highest level in September since June, and increased 0.6% from the same period a year ago. (Source: “First-time Buyers Steer Existing-Home Sales Higher in September,” National Association of Realtors, October 20, 2016.)
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Regarding this increase in sales of already-built homes, NAR Chief Economist Lawrence Yun said, “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.” (Source: Ibid.)
Prior to September, sales of existing-homes were declining for two consecutive months.
Yun also added, “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.” (Source: Ibid.)
Housing inventory remains a concern; at the end of September, 2.04 million existing-homes were available for sale. It was 6.8% lower than a year ago and year-over-year has fallen for 16 straight months.
Digging deeper into the data, in September, first-time homeowners amounted to 34% of all existing-home sales for the month. This is something not seen in the last four years. In August, first-time home buyers amounted to 31% of all existing-home sales, and it was 30% in September of 2015.
Individual investors were active again in September, accounting for 14% of all existing-homes sold in the month. In August, they accounted for 13% of sales. Total all-cash transactions amounted to 21% in September, down from 22% in August.
Distressed sales, which include foreclosure and short sales, amounted to just four percent of all existing-home sales. This was down from five percent in August and seven percent a year ago. Foreclosure homes sold for 15% below the market value and short sales sold for 11% below the market value.
The 30-year fixed rate mortgage was 3.46% in September—for the first time since March.
Economists and investors use existing-homes sales figures to examine how the U.S. housing market is performing. If existing-home sales increase, it could suggest there are improvements in the housing market.
NAR also said existing home sales data for the month of October will be released on November 22 at 10:00 a.m. ET.
