Some Healing in the Housing Market: The 5.5% September Home Sales Increase Highest in 5 Years
From First Trust, based on the National Association of Realtors release today:
1. Existing home sales increased 5.5% in September to an annual rate of 5.18 million, much higher than the consensus expected selling rate of 4.95 million. Existing home sales are up 1.4% versus a year ago.
2. The median price of an existing home declined to $191,600 in September (not seasonally adjusted) and is down 9.0% versus a year ago. Single-family home prices are down 8.6% versus last year.
3. The months’ supply of existing homes (at the current sales rate) fell to 9.9 in September from 10.6 in August.
Implications: The housing market is healing. The key implication of today’s report on existing homes is that credit-worthy home buyers are able get loans. After hovering for twelve months in a range between 4.85 million and 5.11 million, existing home sales spiked up 5.5% in September to a 5.18 million annual rate. The monthly gain in September was the most in five years and the level of sales is now above where it was a year ago (see chart above), the first time that has happened since 2005.
Sales are rising as home sellers (including lenders who have foreclosed on previous owners) are cutting prices aggressively. The median sales price on an existing home is down 9% versus last year and the lowest since 2004. We expect further price declines in the year ahead as the industry continues to work off excess inventory. After hitting 11.0 in June – the highest level since 1985 – the months’ supply of single-family existing homes has fallen to 9.4.