Typically, closings take roughly 30 to 60 days once a contract is signed but this advanced 2.4% to a 5.17 million annual rate, this according to the National Association of Realtors. In addition, purchases increased 1.9% from numbers reported last year during the same period and with seasonal patterns adjusted.
Thanks to a stabilizing labor market coupled with declining mortgage interest rates, the economy is getting a buffer during a time when global markets are slowing. Experts believe that more people will be encouraged to buy because of faster wage gains and easier lending standards, especially first time homebuyers.
According to Guy LeBas, managing director at Janney Montgomery Scott LLC who projected an annualized pace of sales at 5.16 million, real estate is on a stable course. He feels that borrowing costs are relatively contained and that the rate of payroll growth is positive for the housing market even if on a modest level.
The average forecast of 77 economists surveyed was an increase in sales at a 5.1 million annual rate with estimates ranging between 4.95 and 5.2 million. In addition, as investors speculated that the European Central Bank would boost economic stimulus and reported earnings for companies like Travelers and Apple, stocks rose for a fourth day. The S&P 500 rose 1% to 1,923.64.
The average existing home price climbed 5.6% to $209,700 and in the South appreciation was led by a 5.1% year-to-date advance. Lawrence Yun, NAR chief economist told reporters that one or two years from now, the housing market will be better. New job creation is looking good, rates are down, and additional inventory is becoming available online.
- Previously Owned Homes – Sales climbed 6% from 2013 to 2.3 million. At the current pace, it would take roughly 5.3 months to get those homes sold, down from last month’s pace of 5.5 months. Anything less than a five-month supply is deemed a “tight market”.
- Existing Single-Family Homes – Sales increased 2% to an annual rate of 4.56 million last month compared to the prior year’s numbers but also the fastest pace seen in one year
- Multifamily Homes – These properties, which include condominiums, climbed 5.2% to a pace of 610,000
- Distressed Sales – Comprised of short sales and foreclosures whereby a lender agrees to less than the actual balance owed of the mortgage, distressed sales accounted for 10% of the total
- First-Time Homebuyers – These buyers accounted for 29% of the market for a third month in September but represented just 30% of all buyers within 17 of the last 18 months
- All Purchases – Cash transactions accounted for roughly 24%, which compared to this same time last year, was down from 33%. Investors, 63% who paid cash, represented 14% of the housing market in September, which for 2013, accounted for 19%.
As stated by John Stumpf, president and chief executive officer at Wells Fargo, even though the residential housing market has improved, which is great for the US economy, some recovery is still needed. He added that he feels strongly the housing market will continue to recover, driven by affordability and pent-up demand.