WASHINGTON, (Reuters) – U.S. sales rose to an 8-month peak in September. But higher prices due to tight supply are pushing out first-time home buyers.
According to the National Association of Realtors, existing home sales increased 7.0% last year, marking the greatest increase since January. This was the seasonally adjusted annual rate of 6.29 millions units. Reuters polled economists to forecast that home sales will rise at 6.09 millions units per year. In all regions, sales rose.
The bulk of U.S. home sales are through home resales. They fell 2.3% year-on-year.
Early in the coronavirus epidemic, housing demand soared. There was an exodus of people from cities to suburban areas and low-density places as they sought larger accommodations that would allow them to have more privacy and be able for online learning and work at home. With the COVID-19 vaccines, workers have returned to work and schools are reopened to allow for learning in person. This has lowered housing demand.
While house price growth is slowing in the face of bidding wars and a slowing economy, it continues to grow. In September, the median current house price rose by 13.3% to $352,800 from one year ago. It was the slightest gain for this year. Because fewer homes were being sold, the moderation of house price inflation is due to smaller houses. This is a decrease of 31% from a previous year and 28% for first-time buyers.
Federal Reserve’s Beige Book Report of Anecdotal Information on Business Activity, Collecting from Contacts Nationwide on or Before October 8, was released Wednesday. It stated that “residential real property activity was unchanged or slightly slowed but overall the market was healthy.”
The number of homes previously owned on the market was 1.27 million in August. That’s 0.8% lower than august and 13% less than one year ago. Due to shortages in inputs and labor, there is still a large backlog. If supply constraint eases, this could help to increase housing inventories.
It would take approximately 2.4 months for the inventory to be exhausted at September’s current sales rate, compared with 2.7 months last year. An inventory of six to seven months is considered a balanced supply-demand ratio.
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