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The end of the summer buying season brought good news for the housing market. After weaker than expected numbers in August, existing home sales numbers rebounded nicely in September.
Total existing–home sales, which are closed transactions that include single–family homes, townhomes and condominiums and, increased 4.7 percent to a seasonally adjusted annual rate of 5.55 million in September from a slightly downward revised 5.30 million in August, and are now 8.8 percent above a year ago (5.10 million).
The numbers continue the 12 consecutive months of gains that the housing market has experienced.
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.”
I’m not sure why Mr. Yun feels the need to spin affordability, because his comments make almost no sense. How can you improve housing affordability while outpacing wage growth by 2 to 1?
The housing market clearly needs more inventory. Same story, different month.
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.
Part of the increase in turn time might be attributed to the new TRID disclosures rules that went into effect last month. As mortgage lenders struggle to implement the sweeping reforms, the increase in time from application to close will no doubt be felt across the board.
In the San Jose, California area average price per square foot was $508, an increase of 12.1% compared to the same period last year. The median sales price for homes in San Jose from July 15th to October 15th was $735,000 based on 2,205 home sales. Compared to the same period one year ago, the median home sales price increased 11.4%, or $75,000, and the number of home sales decreased 2.7%.
National Regional Breakdown
All regions saw growth in September with the Northeast and the West coast seeing the biggest gains.
Northeast – existing home sales 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.
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.
South – existing home sales 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.
West – sales 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.
Across the board prices continue to increase as inventory issues continue to plague the housing market from coast to coast.
At some point, more new construction will have to be added in an expeditious manner to alleviate the inventory and affordability issues that are affecting many of the nation’s biggest housing markets.
California is especially feeling the inventory pinch as the state struggles to meet demand for housing units both existing and new.
Six percent of sales during the month were foreclosuresand 1 percent were short sales, the lowest percentage of short sales since NAR started tracking them in 2008. Foreclosures sold for an average discount of 17 percent below market value in September while short sales were discounted 19 percent.
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