Home sales were up again in September with prices at a record high and inventory at a record low for the month.
Sales of existing homes – which include single-family homes, townhomes, condominiums and co-ops – were up 21% from last September and 9% from August to a seasonally-adjusted annual rate of 6.54 million transactions.
The median price for all housing types was $311,800 during the month, up 15% from a year ago when the median price was $271,500. This marks 103 straight months of year-over-year gains. Prices rose in every region across the country.
“Home prices are rising too fast from insufficient supply and rising demand,” said Lawrence Yun, NAR’s chief economist.
The jump in September is the fourth consecutive month of rising home sales and seems to show no end in sight for the summer buying spree.
“Typical seasonal patterns for home sales have likely been thrown off as a result of this crisis,” said Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association. “Sales that would have normally occurred in the summer have likely been pushed into the fall, and this may account for some of the extremely fast pace of existing sales.”
Record-low interest rates and high demand for homes – including larger homes and vacation homes – also contributed to this September surge, said Yun.
Seasonally surprising
Home sales are back to pre-pandemic levels and beyond with numbers not seen since 2006, said Robert Frick, corporate economist at Navy Federal Credit Union.
“The good news is these house sales boost many other sectors of the economy, including materials and labor for remodeling, as well as furniture and home accessories,” he said.
Housing sales and building are the only true V-shaped parts of the recovery, Frick said.
“The bad news is that if you’re looking to buy a home, competition is fierce and prices are rising at an accelerating clip,” Frick said. “Home shoppers may need to shop for a lot and a builder instead of fighting to buy in this market.”
Greater buyer and seller confidence also helped boost home sales activity this month, said Danielle Hale, chief economist at Realtor.com.
“Rents in many large urban areas are cooling and are not a factor driving buyers into the market, as we’ve seen in the past,” Hale said. “Rather, low mortgage rates are enabling buyers to tackle higher home prices and secure a place of their own.”
But the low supply is tamping down sales.
Inventory at the end of September totaled 1.47 million units,a 1.3% drop from August and a decline of 19% from one year ago, a record low for September.
“There is no shortage of hopeful, potential buyers, but inventory is historically low,” Yun said. “To their credit, we have seen some homebuilders move to ramp up supply, but a need for even more production still exists.”
Properties typically remained on the market for 21 days in September – an all-time low – down from 22 days in August and 32 days a year ago.
Buyers had to act quickly: more than 7 out of 10 homes were on the market for less than a month in September.
Luxury homes in demand
Another contributing factor to rising home prices is an increase in sales of larger and more expensive homes.
Sales in vacation areas have seen strong acceleration since July, according to the report, with a 34% year-over-year gain in September.
The number of buyers purchasing a home for the first time or as an investment were slightly lower in September than in August, with existing homeowners looking to trade up, making up the difference.
There are significantly more properties selling at higher price ranges than in September 2019. Last month 67% more homes between $500,000 and $750,000 were sold, and an additional 86% homes sold between $750,000 and $1 million. At the million dollar and uplevel, more than double the number of homes were sold in September compared tolast year.
Suburbs like Greenwich, Connecticut, that had seen a softening market at the upper end with price depreciation in recent years, are now seeing high sales numbers and high prices, said Yun.
“The uncertainty about when the pandemic will end, coupled with the ability to work from home appears to have boosted sales in summer resort regions,” he said.
