WASHINGTON – More Americans bought homes in September, many for the first time, despite a persistent shortage of properties for sale.
The National Association of Realtors said Thursday that sales of existing homes rose 3.2 per cent from August to a seasonally adjusted annual rate of 5.47 million, the strongest pace since June. Sales rose across the country: 5.7 per cent in the Northeast, 5 per cent in the West, 3.9 per cent in the Midwest and 0.9 per cent in the South.
Demand for homes is solid but supplies are weak. A solid job market and low mortgage rates are bringing buyers into the market, but they’re not finding many homes for sale.
The supply of available homes stood at 2.04 million units, down 6.8 per cent from a year ago. Tight inventories drove the median price of existing homes up 5.6 per cent from a year ago to $234,200.
The institutional investors who bought up homes in recent years have continued to rent them out rather than putting them on the market. Moreover, homebuilders have not aggressively stepped up construction. The Commerce Department reported Wednesday that home construction fell 9 per cent in September to the slowest pace in 18 months.
But buyers have been lured into the market by mortgage rates that remain near historic lows. Mortgage giant Freddie Mac said Thursday that the rate on a 30-year, fixed-rate mortgage rose to 3.52 per cent, still close to the record low 3.31 per cent from November 2012.
The association said first-time home buyers accounted for 34 per cent of the purchases, the most since July 2012. On Tuesday, the real estate firm Zillow released a report showing a surprise increase in first-time home buyers over the past year — good news for the housing market because home ownership rates for adults under 34 have been at record lows.
Jennifer Lee, senior economist at BMO Capital Markets, notes that first-timers account for 40 per cent to 45 per cent of sales in a healthy market, “so more improvement is needed.”
The strong demand for homes combined with tight inventory suggests that would-be home owners could wind up in bidding wars when the home buying season heats up in the spring.
“What is lacking is inventory,” said the association’s chief economist, Lawrence Yun. “If we had more, we would sell more … Home builders need to ramp up construction.”