US existing-homes sales rise 7%, the most in a year

Oct 21, 2021

BLOOMBERG [WASHINGTON] Sales of previously owned US homes rose in September by the most in a year, suggesting a slight easing in home-price growth and lower mortgage rates a month earlier provided a tailwind for demand.

Contract closings increased 7 per cent from the prior month, the most since September 2020, to an annualised 6.29 million, figures from the National Association of Realtors (NAR) showed on Thursday (Oct 21). The median forecast in a Bloomberg survey of economists called for a 3.7 per cent gain.

"Some improvement in supply during prior months helped nudge up sales in September," Lawrence Yun, NAR's chief economist, said in a statement. "Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year."

Buyer demand, while cooling since the end of 2020 due to a limited number of affordable homes on the market, remains firm. Last month's annualised pace was the strongest since January and above the 6.1 million median estimate in the Bloomberg survey. The median selling price of an existing house rose 13.3 per cent in September from a year ago to US$352,800. That was the smallest annual price increase since the end of 2020.

The homes that are available are flying off the market, underscoring the strength of buyer demand. Properties remained on the market for an average of 17 days last month, compared to 21 days a year ago. Eighty-six per cent of the homes sold in September were on the market for less than a month.

There were 1.27 million homes for sale last month, down 13 per cent from a year ago. At the current pace it would take 2.4 months to sell all the homes on the market, compared with an average of about 4 months before the pandemic. Realtors see anything below 5 months of supply as a sign of a tight market. High prices have pushed the dream of buying a home further out of reach for many. Compared with a year earlier, sales are increasing in the upper end of the market, while purchases of properties listed at less than US$250,000 are down.

The share of first-time buyers eased last month to 28 per cent. And looking ahead, housing affordability is not likely to improve. While borrowing costs were cheaper in August, the contract rate on a 30-year mortgage rose last week to a six-month high, according to the Mortgage Bankers Association.