Sales of existing single-family homes shot up 3.1 percent in September after two consecutive months of decline, the National Association of Realtors reported today, and reached the third-highest level on record.
Existing home sales in September reached a seasonally adjusted annual rate of 6.75 million units, up from 6.55 million units in August and up from 6.68 million units in September 2003. The seasonally adjusted rate projects the monthly sales total over a 12-month period.
David Lereah, chief economist for the association, said the steady decline in mortgage interest rates since June has bolstered sales. “Since 1971 there have been only five months when mortgage interest rates were lower, and all of those have been during the last year and a half,” he said. “The good news is that interest rates have been fairly stable over the last month, hovering near generational lows, and that is increasing the purchasing power of buyers trying to get into the housing market.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.75 percent in September, down from 5.87 percent in August; it was 6.15 percent in September 2003.
Walt McDonald, association president and broker-owner of Walt McDonald Real Estate in Riverside, Calif., said the sales lift may be temporary. “We still expect mortgage interest rates to gradually rise, so the best window may be right now for potential home buyers who have been on the sidelines. With these low interest rates, we may also see a pickup in refinancing activity which will feed into consumer spending and help the overall economy,” McDonald said.
Housing inventory levels at the end of September rose 0.4 percent from August to a total of 2.45 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace. A six-month supply is typically considered to be a market that is in equilibrium between a buyer’s market and a seller’s market, and anything less than a six-month supply is considered to be a seller’s market.
The national median existing-home price was $186,600 in September, up 8.6 percent from September 2003 when the median price was $171,800. The median is a typical market price where half of the homes sold for more and half sold for less. In August, the national median existing-home price was $190,100, and in July it was $191,300.
This drop in national median price is a normal seasonal occurrence because there is a higher ratio of singles and childless couples in the market who are generally purchasing moderately priced homes, the association reported. Most families with children, who typically buy more expensive homes, time their purchase based on school year considerations. As a result, the only valid comparisons for median home prices are with the same period a year earlier.
Regionally, home resale activity in the West increased 7.8 percent in September to an annual rate of 1.93 million units, and was 4.3 percent above a year earlier. The median existing-home price in the West was $266,400, up 14.9 percent from the same month in 2003 but down from $270,000 in August.
Existing-home sales in the Northeast rose 4.1 percent in September to a pace of 760,000 units, and were 2.7 percent above September 2003. The median existing-home price in the Northeast was $217,900, up 10.8 percent from a year ago but down from the $218,500 reported in August.
Existing homes in the Midwest were selling at an annual rate of 1.39 million units in September, up 3.7 percent from August; the pace was 2.8 percent below September 2003. The median price in the Midwest was $152,000, up 5.8 percent from the same month a year earlier but down from the $156,900 reported in August.
The existing-home sales pace in the South slipped 0.7 percent in September to an annual rate of 2.67 million units, but was 0.8 percent higher than last September. The median price of an existing home in the South was $170,400, which was 7.4 percent higher than a year ago but down from the $173,900 reported in August.
The association also reported that following availability of revisions by the U.S. Census Bureau to some statistical data, and feedback from the U.S. Federal Reserve Board, the association will make benchmark revisions to both annual existing-home sales totals and monthly seasonally adjusted annual sales rates. Although the data will change, the overall characterization of the resale market in terms of historic comparisons and relative changes will be fairly consistent with previously reported data, the association noted.
The changes will include addition of existing condominium and cooperative sales to the monthly series, with monthly revisions going back to 1999. Data prior to 1999 will not be directly comparable due to the benchmark break, but annual revisions will be made going back to 1981 when tracking of the condo market began. Monthly revisions for the single-family component will be made going back to 1989. The separate quarterly track of existing condo/co-op sales will be discontinued, although the new monthly data will show that segment’s market share. The association’s benchmark approach has been reviewed by the U.S. Federal Reserve Board and will be published in early 2005.
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