Sales of Existing Homes Rise to One-Year High
Sales of previously owned U.S. homes rose in September to the highest level in a year, adding to signs that residential real estate will be a plus for the economy.
Closings, which usually take place a month or two after a contract is signed, advanced 2.4% to a 5.17 million annual rate, the National Association of Realtors reported in Washington. Purchases rose 1.9% from the same month last year before adjusting for seasonal patterns.
Traction in the labor market and falling mortgage rates are helping underpin demand and providing a buffer for the economy as global markets slow. Easier lending standards and faster wage gains would attract more buyers, including those making their first foray into homeownership.
“We’re on a pretty stable trajectory,” said Guy LeBas, managing director at Janney Montgomery Scott LLC in Philadelphia, who projected a 5.16 million annualized pace of sales. Borrowing costs are “pretty contained. The rate of payroll growth is a modest positive for the housing market.”
The median forecast of 77 economists surveyed by Bloomberg News called for sales to climb to a 5.1 million annual rate. Estimates ranged from 4.95 million to 5.2 million.
The market, “one year from now, two years from now, it will be better,” Lawrence Yun, NAR chief economist, told reporters as the figures were released. “Job creation is good, we have low rates and more inventory is coming online.”
The number of previously owned homes on the market rose 6% from a year earlier, to 2.3 million. At the current sales pace, it would take 5.3 months to sell those houses, compared with 5.5 months at the end of the prior month. Less than a five months’ supply is considered a tight market, the Realtors group has said.
Purchases increased in three of four regions, led by a 7.1% gain in the West. Sales also rose in the Northeast and South.
Sales of existing single-family homes increased 2% to an annual rate of 4.56 million in September from the prior month, also the fastest pace in a year. Purchases of multifamily properties -- including condominiums -- rose 5.2% to a 610,000 pace.
Of all purchases, cash transactions accounted for about 24%, down from 33% 12 months earlier, the report showed. Investors, 63% of whom paid cash, represented 14% of the market last month. In September 2013, they accounted for 19%.
Distressed sales, comprised of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 10% of the total.
First-time buyers accounted for 29% of the market for a third month in September. They’ve represented less than 30% of all buyers in 17 of the past 18 months.
The share will “steadily increase with an improving economy and job creation,” Yun said.
