Home Sales Down But Home Price Rise in Portland OR

After hitting the highest level in nearly four years, existing home sales declined in September, but limited inventory conditions continued to pressure home prices in much of the country. Total existing home sales declined 1.86% to a seasonally adjusted annual rate of 5.29 million from a downwardly revised 5.39 million the month previous but are 10.67% above the 4.78 million-unit pace in September 2012. Sales have remained above year-ago levels for the past 27 months.

 
Existing Home Sales

Affordability has fallen to a five-year low as home price increases easily outpaced income growth. Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown.

The national median existing home price for all housing types was $199,200, up 11.7% from September 2012. This is the 10th consecutive month of double-digit year-over-year increases. Listing data shows some of the strongest increases in listing price from a year ago are in some of the most affected areas including the Detroit area - up 44.6%, Las Vegas - up 30.7% and Sacramento - up 28.9%.

Total housing inventory at the end of the month was unchanged at 2.21 million existing homes available for sale, which represents a 5.0-month supply at the current sales pace, compared with a 4.9-month supply the month before. Unsold inventory is 1.8% above a year ago, when there was a 5.4-month supply.

There are far-ranging consequences from the government shut-down in Washington. Just one impact is delays in tax transcripts needed for approval of mortgage loans which put a monkey wrench in the transaction process and could negatively impact next month's closings.

Flood insurance also is a concern. Ten-percent of transactions last month were located in flood zones, and that nearly one out of 10 of those transactions were delayed or canceled due to concerns over rising insurance rates. Notably higher flood insurance rates went into effect on October 1, and could impact future sales in flood zones.

Single-family home sales slipped 1.5% to a seasonally adjusted annual rate of 4.68 million, down from 4.75 million in the previous month, but are 10.9% above the 4.22 million-unit pace in September 2012. The median existing single-family home price was $199,300 which is 11.4% higher than a year ago.

Regionally, existing home sales in the Northeast declined 2.8% to an annual rate of 690,000 but are 15.0% above September 2012. The median price in the Northeast was $240,900, up 2.3% from a year ago. Existing home sales in the Midwest fell 5.3% to a pace of .25 million, but are 12.6% higher than a year ago. The median price in the Midwest was $158,400, which is 9.0% above September 2012.

In the South, existing home sales declined 1.4% to an annual level of 2.10 million but are 9.9% above September 2012. The median price in the South was $171,600, up 13.9% from a year ago. Existing home sales in the West rose 1.6% to a pace of 1.25 million and are 7.8% higher than a year ago. With ongoing inventory restrictions, the median price in the West rose to $286,300, which is 16.8% above September 2012.