The recent rollercoaster of existing-home sales continued in September, with figures easily exceeding expectations at a seasonally adjusted annual pace of 6.29 million units, according to the National Association of Realtors (NAR).
That’s a jump of 7.0%, with sales rebounding after their disappointing step-back during the previous month. Sales are down 2.3% from the booming fall the housing market saw last September, but activity remains very robust, especially as inventory has slowly began to improve.
“Some improvement in supply during prior months helped nudge up sales in September,” said Lawrence Yun, chief economist for the NAR. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.
“As mortgage forbearance programs end, and as homebuilders ramp up production – despite the supply-chain material issues – we are likely to see more homes on the market as soon as 2022,” said Yun.
A pickup in existing-home sales was expected in the short term given the June and July uptick in pending sales, which typically lead existing-home sales by a few months.
“The gain in existing home-sales in September reflects contracts signed earlier in the summer,” said Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association (MBA). “MBA’s purchase application data showed an 8% gain in September, which is evidence of growing demand for buying a home and supports further sales increases in the months ahead.”
The MBA projects existing-home sales this year to come in at an annualized pace of 6.07 million units, up 7% from 2020.
Despite the improving inventory, low supply does continue to hamper the market. Total housing inventory at the end of September was at 1.27 million units, down 0.8% month over month and 13.0% year over year. Unsold inventory sits at a 2.4-month supply at the present sales pace, down 7.7% from August and down from 2.7 months in September last year.
“With inventory at only 2.4 months’ supply, and median home prices increasing nationally at 13%, it was not surprising to see the first-time homebuyer share of the market drop again to 28%,” Fratantoni said. That’s down from 29% in August and 31% in September 2020, as well as below last year’s 31% annual share of first-time buyers.
“First-time buyers are hit particularly hard by the historically high home prices as they largely do not have the savings required to buy a home or equity to offset such a purchase,” said Yun.
Meanwhile, with the market still very competitive — properties were on the market for 17 days in September — all-cash sales increased as a share of the market, accounting for 23% of all transactions. That’s up from 22% month over month and from 18% year over year.