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Existing Home Sales Level Off; Prices Drop From Last Month

by devteam October 21st, 2013 | Share

Even though sales of existing homesrndrifted off the record levels established in the previous two months, Septemberrnsales were higher by double digits than a year earlier.  The month was the 27th consecutive onernin which prices were higher year-over-year.</p

The National Association of Realtors®rnsaid Monday that total existing home sales, including single-family homes,rntownhomes, condos, and cooperative apartments, declined 1.9 percent to arnseasonally adjusted annualized rate of 5.29 million in September.  August sales were originally reported at 5.48rnmillion but today’s adjustment wiped out the 1.7 percent reported increase thatrnmonth, putting the revised August number at 5.39 million, unchanged fromrnJuly.  September sales were 10.7 percentrnhigher than in September 2012 when the pace of sales was 4.78 million units.  </p

Existing single-family homes sold at arnseasonally adjusted annual rate of 4.68 million, down from 4.75 million inrnAugust but sales remain 10.9 percent higher than in September 2012.  Condo and co-op sales were down 4.7 percentrnto 610,000 units from 640,000 units in August. rnThis was 8.9 percent higher than sales a year earlier. </p

Lawrence Yun, NAR chief economist, said a decline was expected.rn”Affordability has fallen to a five-year low as home price increases easilyrnoutpaced income growth,” he said. “Expected rising mortgage interest rates willrnfurther lower affordability in upcoming months.  Next month we may seernsome delays associated with the government shutdown.”</p

NAR President Gary Thomas said there are far-ranging consequences from the periodicrnstalemates in Washington. “Just one impact of the recent government shutdown -rndelays in tax transcripts needed for approval of mortgage loans – put a monkeyrnwrench in the transaction process and could negatively impact sales closings inrnnext month’s report,” he said.</p

Inventories remained low in some parts of the country NAR said, puttingrnpressure on home prices which continue to rise. rnThe national median existing-home price for all housing types wasrn$199,200 in September, up 11.7 percent from September 2012 and the 10thrnconsecutive month of double-digit year-over-year increases.  The median existing single-family home pricernwas $199,300, 11.4 percent higher than a year ago and the condo price wasrn$198,600, up 14.2 percent from September 2012.</p

There were 2.21 million existing homes available for sale at the end ofrnSeptember.  At the current level of salesrnthis represents a 5.0 month supply, a slight uptick from August and 1.8 percentrnbelow the 5.4 month supply in September 2012. </p

Foreclosures accounted for 9 percent of September sales and short sales forrn5 percent.  The aggregate was up twornpercentage points from August when the 12 percent share for distressed propertyrnsales was the lowest since NAR began tracking them in October 2008.  This lower share of distressed sales is inrnpart responsible for the growth in median prices as is the shrinking discountrnon those sales.  Foreclosures sold for anrnaverage discount of 16 percent below market and short sales were discounted 12rnpercent compared to 21 percent and 13 percent respectively a year ago.</p

NAR said some of the strongest increases in listing (as opposed to sale)rnprices from a year ago are in the Detroit area, up 44.6 percent; Las Vegas, uprn30.7 percent; and Sacramento, up 28.9 percent.</p

Thomas expressed concern over the impact of flood insurance may have on homernsales going forward. “Realtors® report that approximately 10 percent ofrntransactions in September were located in flood zones, and that nearly one outrnof 10 of those transactions were delayed or canceled due to concerns overrnrising insurance rates.”  Notably higher flood insurance rates went intorneffect on October 1, and could impact future sales in flood zones.</p

First time buyers accounted for 28 percent of sales in September, the samernas in August but down from 32 percent a year earlier.  Thirty-three percent of sales were all cash,rnup 1 percentage point from August and 5 from the year before.  Investors purchased 19 percent of homesrncompared to 17 percent in August and 18 percent in September 2012.  Seventy-four percent of investor purchases inrnSeptember were all cash.</p

The median time on market for all homes was 50 days in September, up from 43rndays in August, but much faster than the 70 days on market in September 2012.rnShort sales were on the market for a median of 93 days, while foreclosuresrntypically sold in 43 days, and non-distressed homes took 49 days. Thirty-ninernpercent of homes sold in September were on the market for less than a month.</p

Regionally, existing-home sales in the Northeast declined 2.8 percent to anrnannual rate of 690,000 in September, but are 15.0 percent above September 2012.rnThe median price in the Northeast was $240,900, up 2.3 percent from a year ago.</p

Existing-home sales in the Midwest fell 5.3 percent to a pace of 1.25rnmillion, but are 12.6 percent higher than a year ago. The median price in thernMidwest was up 9.0 percent on an annual basis to $158,400. </p

In the South, existing-home sales declined 1.4 percent to an annual level ofrn2.10 million in September, but are 9.9 percent above September 2012. The medianrnprice in the South was $171,600, up 13.9 percent from a year ago.</p

Existing-home sales in the West rose 1.6 percent to a pace of 1.25 millionrnin September, and are 7.8 percent higher than a year ago. With ongoingrninventory restrictions, the median price in the West rose to $286,300, which isrn16.8 percent above September 2012.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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