By Nicole Friedman
Home sales rose to a new 14-year high in September, bolstered by
robust demand and a shortage of homes for sale that is making the
housing market one of the brightest spots for the U.S. economy.
Existing-home sales rose 9.4% in September from August to a
seasonally adjusted annual rate of 6.54 million, the highest rate
since May 2006, the National Association of Realtors said Thursday.
The September sales marked a 20.9% increase from a year
The latest figures for existing-home sales, which make up most
of the housing market, marked the fourth straight monthly increase
and one of the best stretches for the housing market in years.
Real-estate agents and economists credit the strong demand for
housing to record-low interest rates, a large population of
millennials entering prime homebuying years and a desire for more
household space driven by the coronavirus pandemic. As many people
work and attend school from home, home shoppers are willing to move
farther from their offices in exchange for bigger houses with more
"Home prices are simply rising too fast due to insufficient
supply and very strong demand," said Lawrence Yun, NAR's chief
A very limited supply of homes for sale, especially in lower
price tiers, pushed prices to new highs. The median existing-home
price rose 14.8% from a year earlier to $311,800, a record high
nominally and adjusted for inflation, NAR said, and the highest
annual median price increase in 15 years.
U.S. jobless claims fell last week to their lowest level since
March, the Labor Department said Thursday, raising hopes that the
economy could be starting to mend following pandemic-related
lockdowns and layoffs.
The housing market has been one of the economy's few consistent
areas of strength since sales picked up in the spring. Strong home
sales can create more construction jobs and lead to more spending
on home goods such as furniture and appliances.
Housing data reflecting building and new-home sales has also
been bullish. A measure of U.S. home-builder confidence rose to a
record high in October in data going back to 1985, the National
Association of Home Builders said Monday.
Housing starts, a measure of U.S. home-building, rose 1.9% in
September from August, the Commerce Department said Tuesday.
Residential permits, which can be a bellwether for future home
construction, increased 5.2%.
But a pre-existing shortage of homes has worsened in recent
months, as buyers flooded into the market and sellers held off on
listing their homes. There were 1.47 million homes for sale at the
end of September, down 19.2% from a year ago, according to NAR. At
the current sales pace, there was a 2.7-month supply of homes on
the market at the end of September, the lowest level on record in
data going back to 1982.
In Phoenix, for example, total for-sale listings in the week
ended Oct. 10 fell 21% year-over-year and home values rose almost
12% in September from a year earlier, according to Zillow Group
Houses often stay on the market for less than a week, said R.J.
Apana, who closed on a four-bedroom house in Phoenix in
"Those good properties that have what you're looking for
amenity-wise and then also fit into your budget, those usually
don't last too long," he said. "When you are looking and find
something you like, you have to be very aggressive."
The inventory shortage could slow the sales pace in the coming
months, economists say. Home sales increased most strongly in
September for homes priced at $750,000 and above, according to NAR.
"Home sales are occurring where there is inventory -- on the
upper-end market," Mr. Yun said.
Some workers are moving from high-cost coastal cities to more
affordable locales, making those markets more competitive. Of 87
large metro areas tracked by real-estate brokerage Redfin Corp.,
only San Francisco and New York City posted an annual increase in
the number of homes for sale in September.
"Urban and city centers are seeing what I would call a demise in
demand, " said Mike Miedler, chief executive of Century 21 Real
Estate LLC, a subsidiary of Realogy Holdings Corp. Meanwhile, "in
some places, like Jacksonville, like Salt Lake City, like
Sacramento, the [prices] are through the roof. They're getting
Existing-home sales rose the most month-over-month in the
Northeast, at 16.2%, and in the West, at 9.6%.
Homes typically go under contract a month or two before the
contract closes, so the September figures largely reflect purchase
decisions made in August or July.
News Corp, owner of The Wall Street Journal, also operates
Realtor.com under license from the National Association of
Write to Nicole Friedman at email@example.com
(END) Dow Jones Newswires
October 22, 2020 14:53 ET (18:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.