September was another strong month for existing-home sales, which rose to a seasonally adjusted annual rate of 6.54 million units, according to the National Association of Realtors (NAR).
It’s the highest pace since May 2006 and marked the fourth straight month of monthly existing-home sales growth, rising 9.4% from August. Year over year, existing-home sales were up 20.9%.
“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” said Lawrence Yun, chief economist for the NAR. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”
“Typical seasonal patterns for home sales have likely been thrown off as a result of this crisis,” concurred Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association. “Sales that would have normally occurred in the summer have likely been pushed into the fall, and this may account for some of the extremely fast pace of existing sales on a seasonally adjusted basis.”
September existing single-family sales were at a seasonally adjusted annual rate of 5.87 million, up 9.7% monthly and 21.8% annually. Existing condo and co-op sales were at a seasonally adjusted annual rate of 670,000, up 6.3% from August and 13.6% from September last year.
Sales could have been potentially higher if there were more listings available. Just 1.47 million homes were for sale at the end of September, down 1.3% from August and down 19.2% from September last year. At the current sales rate, unsold inventory is at a 2.7-month supply, down from 3.0 months in August and 4.0 months one year ago.
Yun described the level of inventory as “historically low,” compared to “no shortage of hopeful, potential buyers.” The searing market’s minuscule supply threatens to hinder first-time buyer activity, as low inventory continues to spur competition. Properties stayed on the market just 21 days in September. That’s a record low, seasonally down from 22 days in August and 32 days year over year. Seventy-one percent of homes sold in September remained on the market for less than a month.
September’s median price, meanwhile, reached $311,800 up 14.8% from last year. It was the 103rd consecutive month of annual gains, with prices increasing in every region. Existing single-family homes sold for $316,200, up 15.2% year over year, while existing condos and co-ops saw a median price of $272,700, up 9.9% annually.
The share of first-time buyers, unsurprisingly, took a step back during the month. September saw first-time buyers accounting for 31% of sales, down from 33% in both August 2020 and September 2019.
“Fortunately,” said Fratantoni, “we are seeing a pick up in the pace of construction, which should bring more inventory onto the market for next year’s buyers.”
“To their credit,” agreed Yun, “we have seen some homebuilders move to ramp up supply, but a need for even more production still exists.”
Yun also noted that the pandemic seems to have reignited interest in vacation homes. Sales in vacation destination counties have experienced a surge since the summer, rising 3% year over year in September.
“The uncertainty about when the pandemic will end coupled with the ability to work from home appears to have boosted sales in summer resort regions, including Lake Tahoe, mid-Atlantic beaches (Rehoboth Beach, Myrtle Beach), and the Jersey shore areas,” said Yun.
