Sales Activity Increases According to Recent Reports

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According to recent data reported by the National Association of REALTORS® (NAR), the number of existing-home sales increased by 0.7 percent for September after three months of decreases. Inventory limitations and recent hurricanes had an effect on housing sales activity, but the increase in sales is a good and welcomed sign.

Sales activity for existing-homes, which consist of completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased by 0.7 percent to a seasonally adjusted annual rate of 5.39 million in September from 5.35 million in August. “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,” says Lawrence Yun, NAR Chief Economist. “Sales activity likely would have been somewhat stronger if not for the fact that parts of Texas and South Florida – hit by Hurricanes Harvey and Irma – saw temporary, but notable declines,” added Yun.

The median existing-home price for all housing types in September was $245,100, an increase of 4.2 percent from September 2016 ($235,200). September’s price increase marks the 67th straight month of year-over-year gains. Total housing inventory at the end of September rose 1.6 percent to 1.90 million existing homes available for sale, but still remains 6.4 percent lower than a year ago (2.03 million) and has decreased year-over-year for 28 straight months. “A continuation of last month’s alleviating price growth, which was the slowest since last December (4.5 percent), would improve affordability conditions and be good news for the would-be buyers who have been held back by higher prices this year,” said Yun.

First-time homebuyers represented 29 percent of sales activity in September, which is down from 31 percent in August, 34 percent a year ago and on par with the lowest share since September 2015. NAR’s 2016 Profile of Home Buyers and Sellers, which was released toward the end of 2016, showed that the annual portion of first-time buyers was 35 percent.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped to 3.81 percent in September from 3.88 percent in August and is the lowest since November 2016 when it was 3.77 percent.

“Nearly two-thirds of renters currently believe now is a good time to buy a home, but weakening affordability and few choices have made it really difficult for more aspiring first-time buyers to reach the market,” said Yun. NAR President, William E. Brown, says, “Congress should keep in mind the barriers affect prospective first-time buyers as they move forward with tax reform in the coming months.” “There’s no way around the fact that any proposal that marginalizes the mortgage interest deduction and eliminates state and local tax deductions essentially disincentives homeownership and is a potential tax hike on millions of middle-class homeowners,” said Brown. “Reforming the tax code is a worthy goal, but it should not lead to the middle class, who primarily build wealth through owning a home, footing the bill. Instead, Congress should be looking at ways to ensure more creditworthy prospective buyers are able to achieve homeownership and enjoy its personal and wealth-building benefits.”