September existing home sales totaled 5.39mm annualized, a touch above the estimate of 5.30mm and compares with 5.35mm in August which was the lowest level since August 2016. Months’ supply held at 4.2 for a 5th straight month. The average year to date is 5.53mm. The median home price was up by 4.2% y/o/y (slowest rate of growth since August 2014) to $245,100 which happens to be the cheapest since April. The real disappointment within the number was that only 29% of sales went to first time households vs 31% in August and 34% one year ago. That’s the lowest since September 2015.
The hurricanes didn’t seem to have much of an impact on closings (let’s assume most contracts were signed in the June thru August time frame) as they fell only modestly in the South in total but with obviously more impact in Houston and South Florida.
The blame again for the low level of home sales (just off a one year low) is the issue of low inventory and high prices. Both are creating an issue for those that definitely want to buy and making the decision to rent that much easier for others. The NAR said “Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country.” Notwithstanding this belief on their part of strong buyer interest, I still can’t square why the NAHB builder survey still has Prospective Buyers Traffic below the breakeven of 50. Anyway, the NAR went on to say “Realtors this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings, especially at the lower end of the market, and fast rising prices that are straining the budgets of prospective buyers.” It is this last point on prices that helps to explain why first time buyers are still a historically small percentage of overall sales. Low mortgage rates and minimal money down needed for a down payment help but the lack of savings for this cohort still is an impediment.
As for interest rates, those looking for an ARM, 3 month LIBOR (for reference) is at the highest level in almost 9 years. Those looking for a long term fixed rate, the 10 yr yield is up at 2.38% today, matching the highest level in 5 months.
EXISTING HOME SALES