By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
Seasonal cooling in the housing market is normal and expected. And it appears we’re now entering that period of cooling off, with existing home sales down in September after hitting post-recession highs.
Total existing home sales, including single-family homes, townhomes, condos and co-ops, fell 1.9% to a rate of 5.29 million last month from August, according to the latest numbers from the National Association of Realtors. However, sales are still trending 10.7% above year-ago levels.
Even as sales slowed, the national median existing-home prices for all housing types was $199,200, 11.7% above levels seen in September a year ago. This also marked the tenth consecutive month of double-digit annual increases in home values.
This isn’t bad news. In fact, some would say that a cooling off was needed in some markets – particularly in California – in order to avoid a potential market bubble.
The share of home sales that were foreclosures and short sales stood at 14% in September, up from 12% in August and down from 24% in September last year. NAR says that the lower percentage of distressed sales accounts for some of the growth in median price since these sales generally go at a discount.
Inventory, which we’ve been watching closely because of the limited supply that’s affected a lot of markets and buyers, is improving slightly. Unsold inventory represented a 5-month supply at the current sales pace, slightly higher than the 4.9-month supply in August and 1.8% higher than year-ago levels when they were at a 5.4-month supply.
What can we expect through the end of the year? The seasonal cooling will likely continue, but without erasing gains made this year – especially in home values. While inventory is expected to slowly improve, we may see a slight decline as we enter housing’s historically slow season.
This end of year lull shouldn’t be a deterrent to eager buyers, however. While there may be fewer homes for sale, there may be increased opportunities if a lot of buyers decide to hang on the sidelines until the spring.
For sellers, I think the end of the year will still be a good time to list as demand is still extremely healthy and interest rates are still very attractive at 4.49% average for a 30-year, fixed-rate loan.
Overall, it looks like 2013 will continue to be on track for a record post-recession year in housing.