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Existing-Home Sales Regain Momentum in September

Media Contact: Adam DeSanctis / 202-383-1178 / Email

WASHINGTON (October 22, 2015) — Existing–home sales rebounded strongly in September following August's decline and have now increased year–over–year for 12 consecutive months, according to the National Association of Realtors®. All four major regions experienced sales gains in September.

Total existing–home sales1, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, increased 4.7 percent to a seasonally adjusted annual rate of 5.55 million in September from a slightly downwardly revised 5.30 million in August, and are now 8.8 percent above a year ago (5.10 million).

Lawrence Yun, NAR chief economist, says a slight moderation in home prices in some markets and mortgage rates remaining below 4 percent gave more households the confidence to close on a home last month. "September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007 (5.79 million)," he said. "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."

The median existing–home price2 for all housing types in September was $221,900, which is 6.1 percent above September 2014 ($209,100). September's price increase marks the 43rd consecutive month of year–over–year gains.

Total housing inventory3 at the end of September decreased 2.6 percent to 2.21 million existing homes available for sale, and is now 3.1 percent lower than a year ago (2.28 million). Unsold inventory is at 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," says Yun. "Unfortunately, first–time buyers are still failing to generate any meaningful traction this year."

First–time buyers fell to 29 percent of sales in September after climbing to their highest share of the year in August (32 percent). A year ago, first–time buyers represented 29 percent of all buyers.

NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says Realtors® strongly back the passing of H.R. 3700, the "Housing Opportunity Through Modernization Act of 2015." Polychron testified in support of the bill yesterday before the U.S. House Financial Services Subcommittee on Housing and Insurance.

"This bill helps expand homeownership and rental housing opportunities at all levels and specifically includes changes to Federal Housing Administration policies that limit the flexible and affordable financing needed by many potential condo buyers — especially first–time buyers."

All–cash sales rose to 24 percent of transactions in September (22 percent in August) and are unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in September, up from 12 percent in August but down from 14 percent a year ago. Sixty–seven percent of investors paid cash in September.

According to Freddie Mac, the average commitment rate for a 30–year, conventional, fixed–rate mortgage remained below 4 percent for the second consecutive month, declining slightly in September to 3.89 from 3.91 percent in August. A year ago, the average commitment rate was 4.16 percent.

Properties typically stayed on the market for 49 days in September, an increase from 47 days in August but below the 56 days in September 2014. Short sales were on the market the longest at a median of 135 days in September, while foreclosures sold in 57 days and non–distressed homes took 48 days. Thirty–eight percent of homes sold in September were on the market for less than a month.

Distressed sales4 — foreclosures and short sales — remained at 7 percent in September for the third consecutive month; they were 10 percent a year ago. Six percent of September sales were foreclosures and 1 percent (lowest since NAR began tracking in October 2008) were short sales. Foreclosures sold for an average discount of 17 percent below market value in September (18 percent in August), while short sales were discounted 19 percent (12 percent in August).

Single–family and Condo/Co–op Sales

Single–family home sales rose 5.3 percent to a seasonally adjusted annual rate of 4.93 million in September from 4.68 million in August, and are now 9.6 percent above the 4.50 million pace a year ago. The median existing single–family home price was $223,500 in September, up 6.6 percent from September 2014.

Existing condominium and co–op sales were at a seasonally adjusted annual rate of 620,000 units in September (unchanged from August), and are up 3.3 percent from September 2014 (600,000 units). The median existing condo price was $209,200 in September, which is 1.9 percent above a year ago.

Regional Breakdown

September existing–home sales in the Northeast jumped 8.6 percent to an annual rate of 760,000, and are 11.8 percent above a year ago. The median price in the Northeast was $256,500, which is 4.0 percent above September 2014.

In the Midwest, existing–home sales climbed 2.3 percent to an annual rate of 1.31 million in September, and are 12.0 percent above September 2014. The median price in the Midwest was $174,400, up 5.4 percent from a year ago.

Existing–home sales in the South rose 3.8 percent to an annual rate of 2.21 million in September, and are 5.7 percent above September 2014. The median price in the South was $191,500, up 6.2 percent from a year ago.

Existing–home sales in the West increased 6.7 percent to an annual rate of 1.27 million in September, and are 9.5 percent above a year ago. The median price in the West was $318,100, which is 8.0 percent above September 2014.

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NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing–home sales, which include single–family, townhomes, condominiums and co–ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing–home sales, based on closings, differ from the U.S. Census Bureau's series on new single–family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing–home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior–month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single–family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single–family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single–family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper–end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month–to–month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year–ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co–op price often is higher than the median single–family home price because condos are concentrated in higher–cost housing markets. However, in a given area, single–family homes typically sell for more than condos as seen in NAR's quarterly metro area price reports.

3Total inventory and month's supply data are available back through 1999, while single–family inventory and month's supply are available back to 1982 (prior to 1999, single–family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Distressed sales (foreclosures and short sales), days on market, first–time buyers, all–cash transactions and investors are from a monthly survey for the NAR's Realtors® Confidence Index, posted at Realtor.org.

NOTE: The Pending Home Sales Index for September will be released October 29, and Existing–Home Sales for October will be released November 23; release times are 10:00 a.m. ET.