Existing Home Sales Slip in September

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – FELL 2.2 percent, 120,000, in September to a seasonally adjusted annual sales rate of 5.38 million;
  • Sales pace for August was revised up 10,000 to 5.5 million;
  • Median price of an existing single-family home FELL 2.4 percent, $6,800, to $272,100;
  • Year-year the median price is up 5.9 percent or $15,200;
  • Number of homes available for sale was UNCHANGED at 1.83 million;
  • With the decline in sales, the months’ supply of homes for sale in September INCREASED 0.1 months to 4.1 months.

Trends:

  • The September decrease in closings was the steepest since March (270,000)
  • Year-year sales were UP 4.5 percent, the third consecutive month of year-to year increases after 16 months of year-year declines;
  • The median price of an existing single-family home FELL for the third straight month;
  • September marked the third straight month of no increase in the inventory of unsold homes.

Data Source: National Association of Realtors: (NAR)

Image result for home sales

Despite near record low mortgage rates, housing stumbled in September with existing home sales (closings) falling for just the second time in the last six months. The drop was not entirely unexpected as pending home sales (contracts for sale) had fallen 2,5 percent in July.

The dip in closings in September came after two relatively strong months for home sales: the pace of sales rose 130,000 in July and another 80,000 in August.

The slowdown in sales came despite the third straight month of price declines, though the median price of a used home remains up over a year ago. Mortgage rates remain however low. According to Freddie Mac, the average rate for a 30-year fixed rate loan was 3.61 percent in September compared with 3.62 percent in August and 4.63 percent in September 2018.

Sales of existing single-family homes have been treading water for the last six years with closings remaining in a relatively narrow range between 4.6 million and 5.7 million. Prior to the onset of the Great Recession, from January 200 to December 2006, existing home sales averaged 6.1 million per month, peaking at 7.25 million in September 2005.

The slowdown in housing has a ripple effect on sales at appliance stores and furniture stores.

The three-month decline in the median price of an existing home is likely the cause of the inventory drop as would-be sellers hold out for a higher return on their investment. The weaker inventory in turn gives buyers less of a choice and leads to weaker sales and perhaps further price reductions.

Hear Mark Lieberman every Friday, on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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