Existing-Home Sales Turn Around in September, Says NAR
October 25, 2004
WASHINGTON -- Sales of existing single-family homes were back up again in September after two consecutive monthly declines, according to the National Association of Realtors®.
Existing-home sales rose 3.1 percent to a seasonally adjusted annual rate(a) of 6.75 million units in September from a pace of 6.55 million units in August. Last month's sales activity was 1.0 percent above the 6.68-million unit pace in September 2003 and is the third-highest pace on record.
David Lereah, NAR's chief economist, said a steady decline in mortgage interest rates since June is now translating into higher sales. "Since 1971 there have been only five months when mortgage interest rates were lower, and all of those have been during the last year and a half," he said. "The good news is that interest rates have been fairly stable over the last month, hovering near generational lows, and that is increasing the purchasing power of buyers trying to get into the housing market."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.75 percent in September, down from 5.87 percent in August; it was 6.15 percent in September 2003.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said the sales lift may be temporary. "We still expect mortgage interest rates to gradually rise, so the best window may be right now for potential home buyers who have been on the sidelines," he said. "With these low interest rates, we may also see a pickup in refinancing activity which will feed into consumer spending and help the overall economy."
Housing inventory levels at the end of September rose 0.4 percent from August to a total of 2.45 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace.
The national median existing-home price was $186,600 in September, up 8.6 percent from September 2003 when the median price was $171,800. The median is a typical market price where half of the homes sold for more and half sold for less.
The September median price is below August -- a normal seasonal occurrence because there is a higher ratio of singles and childless couples in the market who are generally purchasing moderately priced homes. Most families with children, who typically buy more expensive homes, time their purchase based on school year considerations. As a result, the only valid comparisons for median home prices are with the same period a year earlier.
Regionally, home resale activity in the West increased 7.8 percent in September to an annual rate of 1.93 million units, and was 4.3 percent above a year earlier. The median existing-home price in the West was $266,400, up 14.9 percent from the same month in 2003.
Existing-home sales in the Northeast rose 4.1 percent in September to a pace of 760,000 units, and were 2.7 percent above September 2003. The median existing-home price in the Northeast was $217,900, up 10.8 percent from a year ago. Existing homes in the Midwest were selling at an annual rate of 1.39 million units in September, up 3.7 percent from August; the pace was 2.8 percent below September 2003. The median price in the Midwest was $152,000, up 5.8 percent from the same month a year earlier.
The existing-home sales pace in the South slipped 0.7 percent in September to an annual rate of 2.67 million units, but was 0.8 percent higher than last September. The median price of an existing home in the South was $170,400, which was 7.4 percent higher than a year ago.