Total Existing-Home Sales Contracted 1.5% in September From August

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Data supports the known truth that the real estate market faces growing headwinds that are cooling down the nation’s decade-long housing market boom. The Federal Reserve has succeeded in its objective to slow down the housing market. The National Association of Realtors reported This Week in Real Estate that total existing-home sales contracted 1.5% in September from August, to an annual rate of 4.71 million sales. While sales have retracted due to economic uncertainty home prices continue to be resilient thanks largely to lack of inventory. For a record 127th consecutive month, the median home price increased year-over-year with more than a quarter of homes on the market selling above list price. According to ATTOM’s Q3 2022 U.S. Home Sales Report, the typical investment return or profit margin on median-priced single-family home and condo sales across the U.S. was 54.6 percent, up from 48.8 percent in the third quarter of 2021 and near record levels for this century – some 20 points higher than just two years earlier. Below are a few newsworthy events from the third week of October that influence our business: 

Existing-Home Sales Decrease 1.5% in September. Existing-home sales descended in September, the eighth month in a row of declines, according to the National Association of Realtors. Three out of the four major U.S. regions notched month-over-month sales contractions, while the West held steady. Total existing-home sales retracted 1.5% from August to a seasonally adjusted annual rate of 4.71 million in September. Year-over-year, sales waned by 23.8% (down from 6.18 million in September 2021). Total housing inventory registered at the end of September was 1.25 million units, which was down 2.3% from August and 0.8% from the previous year. The median existing-home price for all housing types in September was $384,800, an 8.4% jump from September 2021 ($355,100), as prices climbed in all regions. This marks 127 consecutive months of year-over-year increases, the longest-running streak on record. Properties typically remained on the market for 19 days in September, up from 16 days in August and 17 days in September 2021. Seventy percent of homes sold in September 2022 were on the market for less than a month. Existing-home sales in the West were identical to last month at an annual rate of 880,000 in September, but down 31.3% from one year ago. The median price in the West was $595,400, a 7.1% increase from September 2021.

Home Prices, Bidding Wars Withstand Sliding Sales. There’s some encouraging news in NAR’s latest housing report, though sales of existing home are still falling amid economic uncertainty. “The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%,” NAR Chief Economist Lawrence Yun says. Despite weaker sales, bidding wars remain strong because of limited inventory. More than a quarter of homes on the market are selling above list price, Yun says. “The current lack of supply underscores the vast contrast with the previous market downturn from 2008 to 2010, when inventory levels were four times higher than they are today,” he adds.

Single-Family Production Continues to Weaken in September. Single-family housing starts declined further in September as high mortgage rates, ongoing building material production disruptions and flagging demand stemming from rising affordability challenges continue to put a damper on new home production. Overall housing starts decreased 8.1% to a seasonally adjusted annual rate of 1.44 million units in September, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The September reading of 1.44 million starts is the number of housing unit’s builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.7% to an 892,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 5.6%, and the pace of single-family permits has declined for seven straight months. The ongoing decline for single-family construction mirrors weakness for single-family builder sentiment, which has now declined for 10 straight months and stands at half the level of a year ago. The September single-family production level is below a 900,000 annualized rate and the lowest level since May 2020. Overall permits increased 1.4% to a 1.56-million-unit annualized rate in September and are up 0.3% on a year-to-date basis. Single-family permits decreased 3.1% to an 872,000-unit rate. The pace of single-family permits has now declined for seven consecutive months.

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