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Existing Home Sales 7.0% Rebound in September

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8 comments on Existing Home Sales 7.0% Rebound in September

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The National Association of Realtors (NAR) reports existing home sales rose 7.0% percent in September. 

Key Details

  • Existing-home sales on a seasonally adjusted annual rate rose 7% in September from August, with all regions showing an increase.
  • Total housing inventory at the end of September amounted to 1.27 million units, down 0.8% from August and down 13.0% from one year ago (1.46 million). 
  • From one year ago, the inventory of unsold homes decreased 13% to 1.27 million – equivalent to 2.4 months of the monthly sales pace. 
  • First-time buyers accounted for 28% of sales in September, down from 29% in August and 31% in September 2020. 
  • Individual investors or second-home buyers, who account for many cash sales, purchased 13% of homes in September, down from 15% in August but up from 12% in September 2020. All-cash sales accounted for 23% of transactions in September, up from both 22% in August and from 18% in September 2020.

Median Price 

  • The median existing-home price for all housing types in September was $352,800, up 13.3% from September 2020 ($311,500). 
  • This marks 115 straight months of year-over-year increases.

Houses are too expensive for most. Home price inflation does not show up in the CPI. Nor do stock market or junk bond bubbles constitute inflation.

Once again, people have become convinced that prices only go up and no price is too high to pay.

Case-Shiller Home Price Index

Median home price is not a good measure because it does not factor in location or the size of the home. 

The Case Shiller Home Price index is a better measure of price because it only counts resales of the same home.

A Better Measure of Inflation

Inflation factoring in housing and medical expenses is much greater than the reported CPI. 

I publish an alternate measure of inflation that factors in housing every month on release of Case-Shiller home price data.

The Case-Shiller national home price index rose 19.7% from a year ago setting a new record for the series, easily beating the housing bubble max increase of 14.5%.

The BLS says the CPI for was up 5.37% from a year ago and rent was only up 1.91% from a year ago. 

For details, discussion, and more charts, please see Real Interest Rates Hit New Record Low as Home Prices Hit New Record High

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8 Comments
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1-shot
1-shot
4 years ago
To all the “Housing Crashers”, if you’d bought the median priced home for $200,000 in 2014, well after the last crash was over, with an 80% mortgage at 4.5%, your monthly principal & interest payment was $766. In 2021, the median priced home of approx. $350,000 with an 80% loan at 3.1% has a P&I payment of $1,014 – a whopping $248 more per month. Meanwhile you gained $150,000 in equity in 7 years. If you kept renting and waiting for the crash that never happened, your rent would be higher than a house payment and you’d have missed out on $150,000 in equity growth.  (These numbers aren’t exact, but they’re close.)  Doomsayers have no idea of the damage they cause to those that believe their “sky is falling” claims by scaring them away from making investments.
BTW, in 2008 totally unqualified buyers were buying multiple homes/condos at a time, not to live in and not even to rent out. They were buying them to flip to another unqualified buyer before they even closed the purchase. They were HOPING that prices would keep going to the moon, even as inventory was exploding. Quite different from now. Most buyers in 2020 & 2021 are much more qualified and are buying to live in their home and raise a family. The FOMO to the moon crowd are mostly in crypto & stonks now, not real estate… and they’re renting or living back with parents.
Sorry, I don’t smell an eminent crash in these numbers. Higher prices alone are seldom the cause of large price drops.
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Eddie_T
Eddie_T
4 years ago
“Houses are too expensive for most.”
Certainly they are expensive…but too expensive? Not so sure about that, if you look at payments.
33% of sales are to 1st time home buyers. For many of those people, it will probably be the best investment of their lifetime. If they get an FHA mortgage with 3.5% down, it amounts to 28X leverage. Fairly safe leverage. Not like buying stocks on margin.
You can make up for overpaying on purchase price over time, if you can stay the course. Unless…..inflation suddenly ceases for good. I don’t look for that to happen. Over my adult lifetime, there haven’t been but a very few instances of deflation in housing (on average anyway), and it damn sure was transitory.
The minimum 1st time buyer FHA down payment (of 3.5%)  for the median house would be only $12, 348, and a likely payment would be about $2300/ month. In the same same market, rent for the same house would probably run $1550 or more.
My cheapest rental house in the burbs is now $1650 for a nice 2 bedroom single family unit. It goes up to $2125 for a 4 bedroom. 
Of 65 year olds in this country, 80% own their own home, compared to 65% overall. The 60-65% level has stayed fairly stable over time, although it dropped slightly for a while….2004 to 2016. Most people want to own a home, and most of them do get one eventually, if they want one. Young people who buy a house and stay the course for a decade almost never lose, and often make excellent gains.
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TexasTim65
TexasTim65
4 years ago
Reply to  Eddie_T
Older people, especially 65 year olds tended to work 1 job in 1 city for their entire lives. So yeah, buying a home when young and staying in it for decades (or trading up in the same market) worked out really well (this describes my parents).
The 21st century economy unfortunately does not lend itself to 1 job and 1 city for your entire life. Only a fraction of the people today will be able to do that. The big gains as you noted, come from staying the course. Those that have to regularly move for their career (voluntarily or other wise) will never be able to get that kind of benefit and in fact buying and selling over and over can be a losing game due to real estate agent fees and other expenses. It may be that the younger people may not be able to get into a home until they near retirement and are not likely to ever move again.
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Eddie_T
Eddie_T
4 years ago
Reply to  TexasTim65
Most break even in 3-5  years at historic rates of inflation. I can show you the numbers. It’s in Dan’s book.
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TexasTim65
TexasTim65
4 years ago
Reply to  Eddie_T
I believe the 5 years part. 3 years in hot markets like Austin too.
The question is how often young people tend to change jobs and move significant distances. This says the median time on a job now is 4.1 years and for younger people (25-34 who would be buying their 1st home) it’s 2.8. Doesn’t bode well for home buying for the next generation.
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Tony Bennett
Tony Bennett
4 years ago
“The https://www.nar.realtor/newsroom/existing-home-sales-ascend-7-0-in-september (NAR) reports existing home sales rose 7.0% percent in September.”
…
Existing home sales are counted at closing.  Takes usually a month or two from signing contract to close.  If you notice mortgage rates were lowest of year (outside of first of year) mid July thru early August … some sales were spurred by fence sitters who jumped on rate (lock in) before they started recent ascent.
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EGW
EGW
4 years ago
A lot of people are not as sensitive to house prices when interest rates are so low and down payment requirements are so relaxed. From their point of view they are buying a monthly payment.
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RonJ
RonJ
4 years ago
Reply to  EGW
“From their point of view they are buying a monthly payment.”
Kind of like a car.
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