Economic Snapshot: First-time buyers propel existing home sales

Photo credit to Dan Moyle

The share of first-time buyers in existing home sales was at its highest pace in four years in September.

Existing home sales

Total existing home sales jumped 3.2 percent to a seasonally adjusted annual rate of 5.47 million in September, up from a downwardly revised 5.3 million in August. Sales are now at their highest pace since June and are 0.6 percent above the previous year.

Matching the highest share since July 2012, first-time buyers were 34 percent of sales in September, up from 31 percent in August and 29 percent last year.

The median existing home price for all housing types in September was $234,2000, up 5.6 percent from the previous year. This marks the 55th consecutive month of year-over-year gains.

Total housing inventory rose 1.5 percent to 2.04 million existing homes available for sale at the end of September, but is still 6.8 percent lower than September 2015. Inventory has now fallen year over year for 16 straight months. Unsold inventory is at a supply of 4.5 months at the current sales pace, down from 4.6 months in August.

Housing starts

Privately owned housing starts were at a seasonally adjusted annual rate of 1,047,000 in September. This is 9.0 percent below the revised August estimate of 1,150,000 and is 11.9 percent below the September 2015 rate of 1,189,000.

Single-family housing starts were at a rate of 783,000 in September. This is 8.1 percent above the revised August figure of 724,000.

Privately owned housing completions were at a seasonally adjusted annual rate of 951,000 in September. This is 8.4 percent below the revised August estimate of 1,038,000 and 5.8 percent below the September 2015 rate of 1,010,000.

Single-family housing completions were at a rate of 687,000 in September. This is 8.8 percent below the revised August rate of 753,000.

Housing Market Index

Builder confidence decreased two points to 63 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”

Two of the three HMI components posted losses in October. The component gauging current sales conditions dropped two points to 69 and the index charting buyer traffic decreased one point to 46. The index measuring sales expectations in the next six months rose one point to 72.

Looking at the three-month moving averages for regional HMI scores, the West increased two points to 75, while the Northeast, Midwest and the South each posted a one point gain to 43, 56 and 65, respectively.

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