Sales of previously owned homes swung to a big increase in
September, putting the market back on track for its strongest year since 2007. Existing-home
sales climbed 4.7% last month to a seasonally adjusted annual rate of 5.55
million, the National Association of Realtors said on Thursday, just shy of the
post-recession high touched in July.
September’s gains came on the heels of an unexpectedly weak
August. The NAR on Thursday revised down August’s figure to 5.3 million from an
initial estimate of 5.31 million. Stock-market turbulence and uncertainty about
interest rates might have prompted some buyers to hold off on making purchases
in August, economists noted.
The September increase puts the market on pace for its best
year since before the recession. Better job growth, continued low mortgage
rates and pent-up demand are fueling activity, according to Lawrence Yun, chief
economist for the Realtors group. Many economists expect the pace of sales to
flatten or slow later this year, but Mr. Yun said sales still should record
their best performance in eight years.
An increase of college-educated professionals and a lack of
new construction have helped drive up prices, said Matthew Brennan, a
real-estate agent with real estate brokerage Redfin in Portland, Ore. His local
market is “kind of crazy right now,” he said.
There is less certainty about whether the U.S. housing
market can sustain its robust activity into next year. Employment generally has
been strong in 2015, but the pace of job creation slowed in September, with
employers adding just 142,000 jobs. The three-month average of 167,000 a month
through September was the slowest three-month pace since February 2014.
Among his biggest concerns: first-time home buyers. The
share of such purchasers fell to 29% of sales in September from 32% in August. New
buyers are critical to the long-term health of the housing market because they
represent new demand, not just existing homeowners trading properties among
themselves.
The biggest problem for young purchasers is that home prices
are rising much faster than incomes. The national median home price was
$221,900 in September, up 6.1% from a year earlier. Incomes, by contrast, have
been growing at roughly 2%. That makes it more difficult for potential buyers
to save for a down payment on a home, especially in regions like the South and
West, where home prices have risen the fastest over the past year.
The combination of rising prices and affordability
constraints is beginning to weigh on the market. Redfin said sellers of 25% of
homes on the market in September dropped their asking prices, up from 20% a
year ago, suggesting the strong market has swelled sellers’ expectations. A
lack of inventory, and especially a dearth of new-home construction, is feeding
the problem. Inventory stood at 4.8 months’ worth of supply, down from 5.1
months’ worth in August, according to the Realtors.
At the peak in February 2007, existing-home sales touched a
recent high of 5.79 million. The average from 2010 to 2014 was 4.6 million.
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