Existing Sales Decline

Existing home sales decreased 1.9% in September from a significant downward revision in August, but were up 10.7% from the same period a year ago. The National Association of Realtors (NAR) reported that September 2013 total existing home sales were at a seasonally adjusted rate of 5.29 million units combined for single-family homes, townhomes, condominiums and co-ops. The August level was 5.39 million units, downwardly revised from a previously reported 5.48 million units. The West increased 1.6% in September, while the Midwest, Northeast and South decreased 5.3%, 2.8% and 1.4% respectively. All regions were up from a year ago: 15.0% in the Northeast, 12.6% in the Midwest, 9.9% in the South and 7.8% in the West.

The September 2013 level of single-family existing sales fell 1.5% to a seasonally adjusted 4.68 million sales from a downwardly revised August level, but was up 10.9% from the same month a year ago. Seasonally adjusted condominium and co-op sales were down 4.7% in September to a seasonally adjusted 610,000 units, and were up 8.9% from the same period a year ago.

The total housing inventory remained unchanged in September from the previous month at 2.21 million existing homes for sale. At the current sales rate, the September 2013 inventory represents a 5.0-month supply compared to a 4.9-month supply in August, and a 5.4-month supply of homes a year ago. NAR also reported that the September median time on market for all homes was 50 days, up from 43 days in August but down from 70 days during the same month a year ago. NAR reported that 39% of all homes sold in September were on the market less than a month, marking a slower pace from 43% in August.

The share of distressed sales increased to 14% in September, up from 12% in August which was the lowest level since NAR initiated monthly tracking in October 2008. The September distressed share was down from 24% a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts.

The median sales price for existing homes of all types was $199,200 in September, down for a third consecutive month and down from $209,700 in August (revised down from a previously reported $212,100). The September median sales price was up 11.7% from the same period a year ago. Compared to a year ago, median sales prices increased 16.8% in the West, 13.9% in the South, 9.0% in the Midwest and 2.3% in the Northeast. The median condominium/co-op price decreased to $198,600 in September from $209,600 in August, but was up 14.2% from the same period a year ago. .

In September 2013, all cash sales were 33% of transactions compared to 32% in August, and 28% in September 2012. Investors accounted for 19% of September 2013 home sales, compared to 17% in August and 18% during the same month a year ago. First-time buyers accounted for 28% of September 2013 sales, unchanged from August and well below the historical average of about 40%.

NAR stated that the rise in mortgage rates lowered affordability; however income growth and improved employment rates will determine how quickly and to what extent first-time buyers enter the market. Last week’s drop in the NAHB Wells Fargo Housing Market Index suggested challenges for the new construction market as well. The 1.9% decline in September sales is consistent with last month’s 1.6% decrease in the Pending Home Sales Index. NAR expects that sales were also hurt by the government shutdown, and that impact will be reported next month.