U.S. home sales surged in September with their strongest showing since January, ending a monthslong stretch when housing market activity slowed from its frenzied pace and high prices crowded out many buyers.
A late-summer dip in mortgage rates and the continued hunt for more space to work at home spurred an uptick in demand, housing analysts said. Sales were especially robust at the high end, aided by a booming stock market.
Overall, existing-home sales rose 7% in September from the prior month to a seasonally adjusted annual rate of 6.29 million, the National Association of Realtors said Thursday.
But near-record high prices around the U.S. have made it more difficult for first-time buyers to compete.
Even the slightly cooler pace of home sales in the preceding months still looked hot by historic standards. Demand from home buyers has outstripped supply for more than a year, but economists said the past month was still a standout.
“This autumn season looks to be one of the best autumn home-sale seasons in 15 years,” said Lawrence Yun, NAR’s chief economist.
Homes in fast-growing metro areas continue to move quickly. Caroline Blake decided to list her home in Charleston, S.C., this month because home prices are so high, and she doesn’t need as much space now that her children are in college.
“I just thought, ‘I’ll give it a go,’” Ms. Blake said. “The market’s so strong.…I just feel the timing was right.”
Ms. Blake listed her house for $1.15 million. She received two offers and accepted a full-price offer within days.
Purchase mortgage applications rose 8% in September, according to the Mortgage Bankers Association, suggesting that home sales could continue to rise in the coming months. But the average rate for a 30-year fixed-rate mortgage has ticked upward, according to Freddie Mac, which could deter some buyers. 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 when rates were lower.
Cash buyers are also playing a large role. About 23% of September existing-home sales were purchased in cash, up from 18% a year earlier, NAR said.
Many homes are selling above listing price. The typical home sold in September was on the market for 17 days, unchanged from the prior month, NAR said.
“The demand for homes remains really, really strong, and I don’t see any supply side loosening up anytime soon,” said Leslie Turner of Maison Real Estate in Charleston.
At the current sales pace, there was a 2.4-month supply of homes on the market at the end of September, the lowest level since April.
Kasey Soska and Jessie Neal moved to Pittsburgh from Chicago this year with plans to buy their first home.
“We loved the city [in Chicago], but also it was completely untenable to own anything other than a small condo,” Mr. Soska said. “Especially with the pandemic and being inside a lot, we were like, ‘We really need space.’”
Jessie Neal and Kasey Soska bought their first house in September after moving from Chicago to Pittsburgh.
Photo: Carol Soska
The couple spent months house hunting but struggled to find homes that they liked within their budget. They finally bought a three-bedroom house in September for about $190,000. “We’re just walking around like, ‘How are we so lucky that we got this house?’” Mr. Soska said.
Others were less fortunate. The share of first-time buyers in the market fell to 28%, its lowest level since July 2015. Fierce competition has pushed home prices sharply higher and priced a number of people out of the market. While sales rose for homes priced above $250,000 in September, the number of transactions declined below that price point, NAR said.
“Price increases are squeezing out the first-time buyers,” NAR’s Mr. Yun said.
Though prices remain near record highs, the pace of price growth is slowing. The median existing-home price rose 13.3% in September from a year earlier, NAR said, to $352,800. That compares to a 15.2% increase the prior month. Price cuts are becoming more common, too. Nearly 15% of listings lowered their prices in September, up from 7.9% in April, according to Zillow Group Inc.
Building activity has increased due to the strong demand, but home builders are facing material delays and labor shortages. Housing starts, a measure of U.S. home-building, fell 1.6% in September from August, the Commerce Department said this week. Residential permits, which can be a bellwether for future home construction, fell 7.7%.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from NAR.
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