Existing home sales jumped 3.2% to 5.47 million at a seasonally adjusted annualized rate vs. the Bloomberg Econoday consensus of 5.35 million SAAR.
However, the report was not entirely glowing. Median prices declined 2.4% and August was revised lower by 0.6%.
Highlights
Existing home sales surged 3.2 percent in September to a 5.470 million annualized rate that exceeds Econoday’s high estimate. The key single-family component leads the report, up 4.1 percent to a 4.860 million rate while condos, where choices are limited and permits for new building are on the rise, fell 3.2 percent to a 610,000 rate.
Home owners have been reluctant to put their homes on the market though supply did rise in the month to 2.040 million from 2.010 million. But supply on a monthly basis, given the rise in sales, fell to 4.5 months from 4.6 months.
Prices have not been firm which helps explain both the lack of supply and also the rise in sales. The median fell 2.4 percent in the month to $234,200 though year-on-year appreciation remains on trend at plus 5.6 percent.
Other important details include a record low for distressed sales, at 4 percent of all transactions, and a solid 34 percent showing for first-time buyers which points to rising traffic and likely reflects the rising cost of rentals.
Regionally, September sales were strongest in the West, up 5.0 percent for a year-on-year gain of 1.6 percent, and in the Midwest, up 3.9 percent on the month for a year-on-year plus 2.3 percent. Total year-on-year resales are up but only fractionally, at plus 0.6 percent.
The new home market has been accelerating strongly and may now be lifting the resale market. Though price appreciation is no better than the 5 percent area, housing is in fact a leading strength for the consumer.
For starters, the new home market has not been accelerating strongly. I posted charts just yesterday.
Private Single-Family Housing Starts 1960 – 2016
Private Single-Family Housing Starts 1960 – 2016 Percent Change
For more details, please see Housing Starts Plunge 9 Percent, Permits Up 6.3 Percent: Deceptively Solid Report?
- First, and as noted above, the new home market has not been accelerating strongly.
- Secondly, new home buyer traffic is not strong.
- Third, Econoday failed to mention the negative revision in August from -0.9% to -1.5%.
- Fourth, huge swings in home sales in both directions are the norm.
- Fifth, declining median price says something about demand and what the marginal buyer can afford.
- Finally, existing home sales are up a mere 0.6% from a year ago.
That said, this was a decent report, especially given the 2.4 percent drop in the pending home sales report.
Yet, something went amiss in that pending home sales report, or these sales will be revised lower next month.
Mike “Mish” Shedlock
It looks like housing starts have doubled over the last five years. That’s not strong growth? And as you noted, it’s still not a very high level historically speaking so there is still a lot more room for even more growth in the coming years.
If something sinks low enough the percentage increase always looks go. From zero, a single sale is an infinite gain.
Shares of DB could double from the lows and and still be down over 80%. Year-over-year strength is not that robust.
Single family starts are up over 10% in the first 9 months, multi units are down 5%, for an overall increase of more than 3%.
“Existing home sales surged 3.2 percent in September to a 5.470 million annualized rate that exceeds Econoday’s high estimate.”
2 things
1) “They” have been banging the drum on Federal Reserve raising interest rates by year’s end. How many fencesitters fell for Lucy with football?
2) Calendar effect. 5 Fridays in September. EVERYONE involved likes a Friday close. The assorted folks getting a check from attorney at closing like nothing better than hitting the bank and knocking off early for the weekend to celebrate. And in most cases the buyer – who has a job – can start right away moving in. Why would a buyer schedule a Tuesday close when can’t move in till weekend? For a typical mortgage the pro rated amount would be in the hundreds of dollars.
Haven’t you been saying #1 for almost a year?
Yes.
The consensus from “experts” at beginning of year was for 4 increases in 2016.
Sometimes they bang the drum a little louder, though. During the summer the din rose for a September hike (after prior whiffs … hence Lucy … they got to be right sometime, right?)
Report from Woodinville/Redmond Wa, home of Microsofties (and very special people),,,
This market has been on fire for I’d say 5 years. Noticed a reversal in July/August where homes didn’t sell within days on multiple bids over price… Now we actually have “New Price” signs popping up a little everywhere. Nothing drastic but very indicative of a softening market and downward trend. For example: house across the street was originally listed at 825K sold for 757K and took 62 days to sell. Another house down the street went on the market 10/1 for 700K (with a just listed sign), 2 days ago “New Price” $675K. (Zestimate $780,650!). Our neighborhood is well established middle-upper class (within 20 minute drive to Microsoft HQ).
House prices only busted through the 2007 peak this past Spring and have now come down more or less 10% to prior peak. For you chart guys it looks like the perfect double top.
This is telling because folks in these parts see unicorns and rainbows everywhere. When Vancouver (2 hours drive North) imposed a 15% foreign tax on house sales folks here went google gaga at the prospect of Chinese buyers moving to the area in droves.
Employment is still strong but I am seeing anecdotal signs of weakness there as well.
Let us not forget that mortgage rates have run up 40 basis points over the last several weeks. That will show up in next month’s numbers.
Even Bill McBride alluded to this as a point of caution… and he likes to churn out cheerful analysis on housing. Moreover, Wolf Richter may be onto something with his very recent commentary on Vancouver and Bay Area house price roll overs. Not happening here yet in Seattle. Amazon and tech need to cool off. Long overdue !
Mish, I apologize for going off topic. But there are some very devious calculated moves being orchestrated by our leaders in congress that need exposure. I’m watching our leaders on TV in real time trying to drag us into another war with Russia. We nation build in the ME and topple regimes for sport. And when Russia tries to defend their one ME position in Syria (that has existed for decades) we make Putin look like a monster who murders 4 year old children in Allepo. But nobody talks about the Obama dronings of Pakistani school children or the thousands of Iraqi kids who lost their lives when Bush invaded their nation based on a pack of lies.
When I was in grade school I asked the nuns why we were at war with the Soviet Union. The Bay of Pigs crisis scared the holy bejezus out of me. They explained the Domino Theory to me – and showed me on a map all the nations the Soviet Union had taken over. And warned that if we didn’t stop them that we would be next on their list.
Fast forward 50 years. How are we any different from the old Soviet Union when it comes to the Domino Theory and regime change?
This needs to be discussed before we end up in a full-on war with Russia which will sacrifice thousands of young American lives.
Please do a blog on it.
LFOldTimer – “…and showed me on a map all the nations the Soviet Union had taken over.” After the Germans marched into Russia in World War II, the Russians lost over 20 million people. 20 million!
A comment I saw yesterday: “So when the 3rd Reich was in its death throes and the rapidly advancing Russians swept across eastern Europe….it’s no small wonder that post war they kept those countries under their control , even if that control was oppressive. The USSR wanted a large buffer from any possible invaders.”
The Russians chased the Germans out, but kept a large buffer. Can you really blame them? They’ve been attacked so many times throughout history.
“Fast forward 50 years. How are we any different from the old Soviet Union when it comes to the Domino Theory and regime change?”
The biggest difference is that the Russians were actually being attacked on their own soil; the U.S. and NATO are not. They’re off trying to topple foreign governments, orchestrate coups, and not because they have to protect their own citizens or their country, but to further corporate business dealings.
That’s the difference: Russia was protecting their country from attack; the U.S. is not!
IMO, Congress is the slacker, but the politicians will say it depends on your definition of “war”…
“Presidents have sent forces abroad MORE than 100 TIMES; Congress has DECLARED war ONLY FIVE TIMES: the War of 1812, the Mexican War, the Spanish-American War, World War I and World War II.”
Selected quote from “The World; Only Congress Can Declare War. Really. It’s True.”
although posted in 1999, it remains relevant as Imperialism slows it onward march for no one.
http://www.nytimes.com/1999/05/02/weekinreview/the-world-only-congress-can-declare-war-really-it-s-true.html
Say, what happened with our Russian cyber retaliation anyway?
Not a threat, but a promise?
If so, we should get lucky: promises generally go unfulfilled.
Why do you (CzarChasm) think it would cost 1,000s of lives? If the Russkies launch, I figure 85 million U.S. lives, minimum. And with power out, no telling what the maximum might be. I’m just hoping to have enough time to relocate. Syria is bad, but I worry more about the situation in Ukraine. It’s been off the newspapers for a few months; no resolution in sight.
I like to look at the first time home buyer segment. Before the housing market burst, they made up ~40% of purchases. At the lows of the housing market collapse, they made up ~29%. This last reading of 34% is an improvement, but still not a recovery.
Housing is in shambles from what bankers printed a decade ago. Youngsters are sojourning in their parent’s basements. Its all about bankers centrally planning housing to protect bank loans, and local school districts desperately attempting to keep pace with the bank’s education inflation. There is little attempt to match supply with what real world people actually want or need. Its the brave new world of inefficient bank central planning.
I am surprised people are still able to buy home. Americans must have money. I hear how bad things are, etc. People must have money out there.