The housing market notched a recent high for salesDate posted: 11/6/14 07:45:00 AM
It might not be a reason to throw a party, but home sales across the nation reached a one-year high in September, according to Reuters.
The recovery of the housing market is still slowly making strides as existing home sales increased by 2.4 percent to an annual rate of 5.17 million units, the best sales pace since September 2013, according to the National Association of Realtors.
The sales climb came as a pleasant surprise to housing experts, who had largely predicted the annual sales rate would be 5.1 million in September. Though it should be noted those projections came on the heels of a drop in August, when sales fell to an annualized rate of 5.05 million units.
While the numbers are up, Sophia Kearney-Lederman, an economist in New York, told Reuters there are a few factors contributing to the relatively lethargic resurgence of the nation's housing market.
"The housing recovery continues to move along sluggishly, as consumers are stuck between tight credit standards and limited wage growth," Kearney-Lederman said.
Despite the increase in transactions posted in September, sales were 1.7 percent below the pace from September 2013.
It's good to be moving forward, but there are still reasons for concern
Diane Swonk, an economist in Chicago, told Reuters there are too many first-time homebuyers steering clear of the housing market. While some are unable to afford a home, others don't seem to have interest in taking out a mortgage loan, happy to rent rather than own.
"We need to see more first-time buyers both willing and able to buy, without the support of excessively easy credit, if we really want to see a healthier and more sustained recovery in housing," Swonk said.
While the nation's total home sales increased in September, first-time buyers had little to do with those rising numbers. In fact, new buyers only had their hand in 29 percent of sales for the third straight month. Reuters reported economists and real estate agents largely believe 40 percent to 45 percent is the ideal range for monthly sales to first-time homebuyers.
While slow wage growth hasn't helped bring new buyers off the sidelines, a drop in mortgage rates could help trigger sales from the sought-after demographic of young adults.
Watching the market in Arizona
One of the most interesting states to track regarding housing data is Arizona, which has been largely volatile with rapid price increases before the burst of the housing bubble.
Tom Ruff, a real estate analyst for the Information Market, told The Arizona Republic he wasn't "surprised" by any of the state's September housing numbers.
"Home prices are stable, and anticipated declines in October can be attributed to modest downward pricing pressure as well as seasonal patterns," Ruff said.
In September, the median home price dropped from $195,000 to $194,000 in the Valley, though the area's median sales price is still five percent higher than the values posted in September 2013.
Housing by the numbers
Reuters revealed a growing number of residential investors are starting to shy away from the housing market. While investors accounted for 19 percent of transactions in 2013, that number was just 14 percent last month.
Concurrently, the inventory of unsold homes on the market jumped six percent to 2.30 million year over year in September. At its current sales pace, it would take 5.3 months for all the homes on the market to be purchased, according to Reuters. Usually a six-month supply of homes is considered a balanced market between supply and demand. There was a 5.5-month supply for all homes on the market in August.
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