Low Inventory and Rising Prices Slow National Home Sales
Photo: © Courtneyk - iStock
Existing-home sales improved slightly in September, rising month over month 0.7 percent to 5.39 million. However, year-over-year sales are down (1.5 percent) for the first time in the past year. According to Lawrence Yun, chief economist for NAR, "Home sales in recent months remain at their lowest level of the year and are unable to break through despite considerable buyer interest in most parts of the country." Sales growth is being restricted by the same two factors that have been plaguing the housing market since the start of the year: low inventory and rising prices.
Renters see potential in the current housing market; two-thirds of all renters believe that now is the ideal time to buy a new home. However, weakening affordability and inventory shortages are making it difficult for many buyers to invest in the market. The lack of inventory is hitting first-time buyers hard, as affordable starter homes in particular are in short supply. As a result, first-time buyers accounted for less of the housing market (29 percent) in September, down from 31 percent a month ago and 34 percent a year ago. For all of 2016, first-time buyers represented only 35 percent of all buyers.
Prices Easing but Still Rising
Median existing-home prices for all housing types increased 4.2 percent, climbing from $235,200 a year ago to $245,100 in September. For the 67th month in a row, home prices have climbed year over year. According to Yun, "A continuation of last month's alleviating price growth, which was the slowest since last December, would improve affordability conditions and be good news for the would-be buyers who have been held back by higher prices this year."
Regional Home Sales
Northeast - Existing-home sales annual rate of 720,000; unchanged from August 2017 but a decrease of 1.4 percent from September 2016.
Midwest - Existing-home sales annual rate of 1.3 million; an increase of 1.6 percent from August 2017 but a decrease of 1.5 percent from September 2016.
South - Existing-home sales annual rate of 2.13 million; a decrease of 0.9 percent from August 2017 and 2.3 percent from September 2016.
West - Existing-home sales annual rate of 1.24 million; an increase of 3.3 percent from August 2017 but unchanged from September 2016.