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By Alexandra Kelley
WASHINGTON (MNI) - Existing U.S. home sales fell 2.2% in September to 5.38
million, below market expectations for total sales of 5.45 million sales, down
from an upwardly revised 5.50 million in August, the National Association of
Realtors (NAR) reported Tuesday.
--NAR chief economist Lawrence Yuan describes the current market as an
"unbalanced situation" largely due to rising home prices, falling sales and
continued low inventory.
--The latest decline ends a run of two consecutive months of solid gains
fueled by low mortgage rates meant to incentivize buying. This has done little
to offset rising home prices, with September 2019 median home prices rising by
5.9% to $272,100 versus the September 2018 median price of $256,900. Yun cites
this as a major deterrent for buyers. "We had hoped that price increase would be
in line with wages, income, CPI, but that is not the case." This marks 91
months, or seven years of home price appreciation.
--Simultaneously, NAR recorded 1.83 million homes available for sale by the
end of the month, down 2.7% from September 2018. This marks the 4th straight
monthly year-over-year inventory decline. This is evident in declining sales
across all regions of the U.S., with Northeast sales falling by 2.8%, Midwest
falling 3.1%, the South falling 2.1% and the West falling 0.9%.
--Home sales by price bracket saw an interesting observation: homes priced
within $100,000 saw sales declines consistent with the lack of inventory, but
more expensive homes in the $250,000-$500,000 price bracket increased. This
amounts to growth in the mid-to-higher-priced homes, and a continued lack of
more affordable housing. Yun floated the possibility of creative solutions to
this shortage, posing "maybe conversion of vacant office spaces or shopping
malls into condominiums" and offers microunits as solutions that are cheaper to
produce." This could attract a key demographic needed to bring housing up:
--Despite gloomy price and inventory figures, realtors surveyed by the NAR
reported that buyer interest had actually gone up. NAR also reported median of
32 days a home is on the market, with Yun calling it "quite a swift moving
market." Yun also noted that while investors are shying away, 33% of all home
sales were driven by first-time home buyers.
--Still, Yun says that "the potential for growth is there" regardless of
incongruities in the market. Calling for more development of affordable homes,
Yun speculates that "we may finally see housing contributing to GDP growth" with
increased residential investment.
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