More First-Time Buyers Enter the Market
After a slow two months, existing-home sales saw impressive gains in September. Total existing-home sales reached 5.47 million, up 0.6 percent from a year ago. Sales haven’t set this high of a pace since June, when existing-home sales reached 5.57 million. What’s more, every region of the country saw an increase in closings. And one segment of the market in particular is driving the increase in sales: first-time buyers. This group accounted for 34 percent of all real estate transactions in September, up from 31 percent a month ago and 29 percent a year ago. This is the most active first-time buyers have been since July 2012. For all of 2015, first-time buyers represented 30 percent of the market.
Even More First-Timers
According to Lawrence Yun, chief economist of the National Association of Realtors (NAR), a lack of inventory over the past months led to an increase in competition for homes, forcing many buyers to stay on the sidelines of the market. But “most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month.” Yun expects that first-time buyers will continue to make up a large segment of the housing market through 2016 and into next spring; affordable mortgage rates and favorable employment numbers will make it economically feasible for more first-time buyers to enter the market.
Inventory Woes Continue
At the end of September, total housing inventory climbed 1.5 percent to 2.04 million existing homes for sale. However, inventory has fallen year over year for the past 16 months; this September’s inventory was 6.8 percent lower than last September’s inventory of 2.19 million homes. At the present sales pace, the current stock of homes would sell in 4.5 months, down from 4.6 months a month ago. Economists with NAR do not expect much relief in the housing shortage. The number of listings typically declines this time of year, and the level of new home construction is inadequate, considering how high the current demand is for houses.
Fortunately, there are fewer distressed homes on the market. Distressed sales fell to just 4 percent of the market in September, a record low. This is a drop of 1 percent from a month ago and 3 percent from a year ago. Of the distressed sales, 3 percent were foreclosures and 1 percent were short sales.
Northeast – Existing-home sales annual rate: up 5.7 percent to 740,000. Sales are unchanged from a year ago.
Midwest – Existing-home sales annual rate: up 3.9 percent to 1.32 million. Sales are 2.3 percent higher than September 2015.
South – Existing-home sales annual rate: up 0.9 percent to 2.16 million. Sales are 0.9 percent lower than September 2015.
West – Existing-home sales annual rate: up an impressive 5 percent to 1.25 million. Sales are 1.6 percent higher than September 2015.