The National Association of Realtors released their Existing Home Sales report for the month of September, and it showed that Existing Home Sales, which measures closings on existing homes, fell 2% to a 3.96 million unit annualized pace, which came in slightly lower than estimates.
On a year-over-year basis, sales are down 15.4%. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said NAR Chief Economist Lawrence Yun.
It is evident that the pace of sales weakened due to the lack of housing inventory, which is roughly at half the levels we saw in 2019, around 2 million, which was already tight.
With normal seasonal build, we saw that inventory levels increased 3.1% last month to 1.1 million, which is still extremely tight. As per this report, there was a 3.4-month supply of homes, which is tight, because between 4 and 5 months is considered normal.
Digging deeper into this report we see that homes remained on the market on average for 21 days, while 69% of homes sold in less than 30 days. While these numbers are slightly higher than their historical lows, they are still showing that demand is strong even in the face of higher interest rates. First-time homebuyers made up about 27% of sales, down from 29% in the previous report. Cash buyers accounted for 29% of sales, and investors were at 18%.
Existing Home Sales may be lessening, but it isn’t because of the lack of demand. Yes, higher interest rates do push a portion of buyers out of the market, but the larger reason sales fell was because of the lack of housing inventory.
Source : https://bit.ly/3Qpkjr7
By: Jon Iacono