The Realtors reported Monday morning that existing single-family home sales fell to a 5.3 million seasonally adjusted annual rate in September from a 5.4 million rate in August. The August rate was revised downward from 5.5 million.
Overall, sales are up 11% from a year ago and sales have remained above the 5 million seasonally adjusted rate for five consecutive months.
However, NAR chief economist Lawrence Yun is not looking for sales to improve in the coming months.
He noted that affordability has fallen to a five-year low as home prices have outpaced income growth. In addition, the recent federal government shutdown delayed loan processing and pushed some potential buyers to the sidelines.
“Next month we may see some delays associated with the government shutdown,” Yun said.
IHS Global Insight economists Stephanie Karol and Patrick Newport also see the shutdown as a negative for home sales. “We expect sales to ebb in the months ahead. The government shutdown has had a negative impact on consumers’ sentiment and contributed to an atmosphere of uncertainty, both of which make Americans less comfortable with making such a large purchase.”
NAR’s September report shows that sales prices declined for the second consecutive month. The median price of an existing home fell to $199,200 in September, down 5% from the prior month.
Meanwhile, congressionally mandated hikes in flood insurance premiums went into effect Oct. 1 and the hikes are quite high on previously grandfathered properties and in newly mapped flood zones.
NAR president Gary Thomas noted some buyers were spooked by the imminent premium increases.
Realtors reported that “approximately 10% of transactions in September 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,” Thomas said.
In September, 33% of sales transactions were all-cash deals where the buyer didn’t need a mortgage.
“First-time homebuyers accounted for 28% of purchases in September, unchanged from August, but down from 32% in September 2012,” NAR said.