Sales of Existing Homes in U.S. Increase More Than Forecast

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Sales of previously owned U.S. homes increased more than projected in September, showing residential real estate continues to contribute modestly to growth, National Association of Realtors data showed Thursday.

Key Points

  • Contract closings rose 3.2 percent to a 5.47 million annual rate (forecast was 5.35 million)
  • Sales climbed 2.8 percent from September 2015 before seasonal adjustment
  • Median sales price increased 5.6 percent from September 2015 to $234,200
  • Inventory of available properties dropped 6.8 percent from a year earlier to 2.04 million

Big Picture

Solid job growth, a recovery in home values since the last recession and 30-year fixed mortgage rates near the lowest level since the 1970s are keeping residential real estate on a steady path forward. At the same time, home prices continue to outpace income gains, limiting the strength of housing and the market’s impact on economic growth. A pickup in construction would give Americans more homes to choose from, boosting turnover and helping bring about more moderate price gains needed to attract a larger share of first-time buyers. Property listings declined on a year-over-year basis for a 16th consecutive month in September.

Economist Takeaways

“Buyer traffic was notably higher compared to one-year ago,” Lawrence Yun, chief economist at the Realtors group in Washington, told reporters as the figures were released. “We are entering a seasonal slowdown. Once the spring buying season returns, it’s going to be quite heated. What is lacking is inventory. The supply situation is not improving.”

The Details

  • Sales increased in all four regions, including the strongest pace of purchases in the West since November 2009
  • At the current pace, it would take 4.5 months to sell the houses on the market, down from 4.6 months in August; the Realtors group has said that less than a five months’ supply indicates a tight market
  • Properties were on the market for 39 days, compared with 49 days a year ago
  • Single-family home sales climbed 4.1 percent to an annual rate of 4.86 million while purchases of condominium and co-op units fell 3.2 percent to a 610,000 pace
  • First-time buyers accounted for 34 percent of all sales, matching the highest share in four years, compared with 31 percent the prior month

— With assistance by Jordan Yadoo

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