Sales of existing homes bounced back in September, with 6.29 million units sold, the highest level since February, and up 7% compared to the prior month, according to a report released on Thursday from the National Association of Realtors.
The sales number was an upside surprise to earlier estimates of 6.1 million units, pointing to a stronger-than-expected housing market last month. Previous reports suggested a housing deceleration.
Improvement in the supply of houses amid continued strong demand contributed to the significant increase in sales on the month. Also, with inflation proven to be less transient than predicted, and a potential interest rate hike looming as early as the end of 2022, buyers seemed to want to take advantage of low mortgage rates.
“As mortgage forbearance programs end, and as homebuilders ramp up production—despite the supply-chain material issues—we are likely to see more homes on the market as soon as 2022,” the report said.
The headline sales number was in line with data on strong gains in August’s pending home sales, according to the NAR report. About 80% of pending sales will become existing sales within two months.
Earlier data from the University of Michigan’s Consumer Sentiment Index signaled that willingness to purchase a home had risen in the past month.
Beneath the headline, the inventory of existing homes decreased 13% to 1.27 million, equivalent to 2.4 months of inventory, led by a decrease in inventory for single-family homes. This is still far below the market’s estimate in normal time, which is around six months of supply.
The median home price was down to $352,800 on the month from $357,700 in August. Still, the median price for an existing home was 13.3% higher than a year ago.
Also, sales from first-time buyers were down to 28% of total sales in September from 29% in the prior month as high prices continued to prevent those buyers from settling down.
We expect that with demand remaining strong through the rest of the year and, with more supply coming online, sales will stay elevated while prices continue to trend downward from the record high in July.