As inventory improved in recent months, existing home sales surged to 8-month high in September, according to the National Association of Realtors (NAR). Though housing demand remains strong as buyers want to take advantage of low mortgage rates before rates rise further, higher home prices are pricing out first-time and young buyers.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, rose 7.0% to a seasonally adjusted annual rate of 6.29 million in September, the highest level since January. However, on a year-over-year basis, sales were 2.3% lower than a year ago, the second annual decline since August 2020.
The first-time buyer share fell to 28% in September, down from 29% in August and down from 31% a year ago. This is the lowest level since July 2015. The September inventory level declined from 1.28 to 1.27 million units and is still down from 1.46 million units a year ago.
At the current sales rate, September unsold inventory sit at a 2.4-month supply, down from 2.6-month in August and from 2.7-month a year ago. This low level supply of resale homes is good news for home construction.
Homes stayed on the market for an average of just 17 days in September, an all-time low, unchanged from August and down from 21 days a year ago. In September, 86% of homes sold were on the market for less than a month.
The September all-cash sales share was 23% of transactions, up from 22% last month and from 18% a year ago.
Tight supply continues to push up home prices. The September median sales price of all existing homes was $352,800, up 13.3% from a year ago, representing the 115th consecutive month of year-over-year increases. The median existing condominium/co-op price of $297,900 in September was up 9.3% from a year ago.
Geographically, all four regions saw an increase in existing home sales in September, ranging from 5.1% in the Midwest to 8.6% in the South. On a year-over-year basis, sales fell 8.3%, 2.7%, and 3.0% in the Northeast, Midwest and West. Sales in the South stayed unchanged.
Meanwhile, the Pending Home Sales Index (PHSI), also reported by the NAR, is a forward-looking indicator based on signed contracts. The PHSI increased 8.1% from 110.5 to 119.5 in August. On a year-over-year basis, sales were 8.3% lower than a year ago.