Existing Home Sales Rose More Than Forecast in September

Sales of previously owned homes increased more than projected in September, showing residential real estate continues to contribute modestly to growth, National Association of Realtors data showed Thursday.

Contract closings rose 3.2% to a 5.47 million annual rate (the forecast was 5.35 million). Sales climbed 2.8% from September 2015 before seasonal adjustment. The median sales price increased 5.6% from September 2015 to $234,200, while inventory of available properties dropped 6.8% from a year earlier to 2.04 million.

Solid job growth, a recovery in home values since the last recession and 30-year fixed mortgage rates near the lowest level since the 1970s are keeping residential real estate on a steady path forward. At the same time, home prices continue to outpace income gains, limiting the strength of housing and the market's impact on economic growth. A pickup in construction would give Americans more homes to choose from, boosting turnover and helping bring about more moderate price gains needed to attract a larger share of first-time buyers. Property listings declined on a year-over-year basis for a 16th consecutive month in September.

"Buyer traffic was notably higher compared to one-year ago," Lawrence Yun, chief economist at the Realtors group in Washington, told reporters as the figures were released. "We are entering a seasonal slowdown. Once the spring buying season returns, it's going to be quite heated. What is lacking is inventory. The supply situation is not improving."

Sales increased in all four regions, including a 5% gain in the West and a 3.9% advance in the Midwest. At the current pace, it would take 4.5 months to sell the houses on the market, down from 4.6 months in August; the Realtors group has said that less than a five-month supply indicates a tight market.

Properties were on the market for 39 days, compared with 49 days a year ago. Single-family home sales climbed 4.1% to an annual rate of 4.86 million while purchases of condominium and co-op units fell 3.2% to a 610,000 pace. First-time buyers accounted for 34% of all sales, matching the highest share in four years, compared with 31% the prior month.