Existing-Home Sales Increased in September Due to First Home Buyers
This morning's release of the September Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.47 million units from a downwardly revised 5.30 million in August. The Investing.com consensus was for 5.35 million. The latest number represents a 3.2% increase from the previous month and a 0.6% increase year-over-year.
Here is an excerpt from today's report from the National Association of Realtors.
Lawrence Yun, NAR chief economist, says the two-month slump in existing sales reversed course convincingly in September. "The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale," he said. "Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month."
"Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in," added Yun. "Unfortunately, there won't be much relief from new home construction, which continues to be grossly inadequate in relation to demand." [Full Report]
For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2013. It can be found here.
Over this time frame we clearly see the Real Estate Bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession. The latest estimate puts us back to the general level around the turn of the century.
The Population-Adjusted Reality
Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 16.9% increase in the US population since the turn of the century. The snapshot below is an overlay of the NAR's annualized estimates with a population-adjusted version.
Existing-home sales are 4.6% above the NAR's January 2000 estimate. The population-adjusted version is 9.5% below the turn-of-the-century sales.