Large drop in home sales shows the market is rebalancing: Remax
September's surprising large year-over-year drop in home sales is a sign that the housing market continues moving toward balance between buyers and sellers, a Remax report said.
There was an 11.6% drop in home sales compared with September 2017, the largest decline since May 2011. However, the median sales price of $241,000 was the highest recorded for any September since the Remax National Housing Report started 10 years ago. This represented an annual increase of 5.6%, more than double the 2.3% price growth seen in the same month between 2016 and 2017.
August had a 1.1% year-over-year drop in home sales and a 3.7% annual gain in prices.
While the for-sale inventory dropped for the 119th consecutive month, the 4.7% decline compared with last September was the smallest annual decline since August 2014.
"The big drop in September closings catches your attention. The market is clearly rebalancing as buyers and sellers continue to process the increasing interest rate environment and what that means to them," Remax CEO Adam Contos said in a press release. "The slower drop in inventory — a visible trend for nearly half a year — further illustrates the ongoing shift toward market equilibrium, and that's healthy in the long term."
Still, there is just a 3.7-month supply of homes for sale on the market, a slight improvement from 3.6 months last September. A home remained on the market for 46 days during the month, up three days from August, but down three from the prior year.
"It's a little surprising to see prices staying so strong, but it's hardly shocking in such a tight market," said Contos. "The headwinds of rising prices and interest rates amid already tight inventory levels have been crimping affordability and slowing sales for most of the year, but it varies by geography."
Of the 54 markets tracked by Remax, only six had a year-over-year increase in sales, including the three Florida cities of Orlando, up 17.2%; Tampa, up 8.5%; and Miami, up 6.8%; along with Birmingham, Ala., up 4%.