Last month, sales of existing homes dropped, having previously hit their highest level in nearly 4 years. However inventory is still limited in many places and this is putting pressure on home prices.
Data from the National Association of Realtors shows the latest existing home sales index fell by 1.9% in September, reaching a seasonally adjusted annual rate of 5.29 million. In spite of the drop, sales are still 10.7% higher than last September, when the adjusted annual rate was 4.78 million. During the past 27 months sales have consistently remained above year ago levels.
According to the article in Property wire.com, last month’s decline was to be expected. It points out that affordability levels have fallen to a five-year low as property price growth exceeds income growth. It’s expected that increasing mortgage rates will see affordability decline even further during the coming months. Next month may also see some delays due to the government shut down. This is because the shutdown will have meant delays in tax transcripts required for mortgage approvals, and this could affect the number of sales closings in next month’s data.
Last month the national median existing home price for all types of housing was $199,200. This is an increase of 11.7% compared to September last year, and is the 10th consecutive month year on year increases have reached double digits. The number of distressed sales which includes short sales and foreclosures accounted for 14% of sales in September, compared to 12% in August which was the lowest monthly percentage seen since October 2008. It’s a huge decrease compared to September 2012 when foreclosures and short sales accounted for 24% of the market. The decrease in foreclosures and short sales also accounts for some of the growth in property prices. When the figures are broken down, 9% of sales in September were for foreclosures, while 5% were for short sales. On average foreclosures sold for 16% below market value, while short sales sold for 12% below market value in September.
Apparently the areas seeing the largest increases in listing price compared to the year ago are in Sacramento where listing prices are up by 28.9%, Las Vegas where they have increased by 30.7%, and Detroit where they are up by 44.6%. At the end of September there was a total housing inventory of 2.21 million existing homes for sale, representing a five month supply. This is slightly up compared to August’s figures when there was a 4.9 month supply. Last month, first time buyers accounted for 28% of sales, down slightly from September last year when they accounted for 32% of sales.