Existing-home sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.09 million in August, the National Association of Realtors (NAR) reports. Sales activity, driven largely by the first-time home buyer tax credit, is at the highest level in over two years, since it hit 5.73 million in July 2007.
Early information from NAR's Profile of Home Buyers and Sellers, a large annual consumer study to be released Nov. 13, shows that first-time home buyers accounted for more than 45% of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29% of transactions in September.
"Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market," says Charles McMillan, NAR president. "Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average."
Total housing inventory at the end of September fell 7.5% to 3.63 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, down from a 9.3-month supply in August. Unsold inventory totals are 15% below a year ago.
"The current housing supply is the lowest we've seen in two and a half years," adds Lawrence Yun, the group's chief economist. "If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.
The national median existing-home price for all housing types was $174,900 in September, which is 8.5% lower than September 2008. Distressed properties continue to downwardly distort the median price.
SOURCE: National Association of Realtors