The seasonally adjusted pace of existing-home sales in the U.S. fell 1.9 percent from a downwardly revised pace of 5.39 million in August to a 5.29 million pace in September but remains 10.7 percent above the 4.78 million unit pace recorded in September of 2012.
As the pace of sales has slowed, the inventory of existing homes on the market has remained unchanged from August with 2.21 million homes on the market at the end of September, a 5.0 month supply versus 4.9 months in August and versus a 5.4 month supply in June 2012 with inventory up 1.8 percent year-over-year. On a national level, around six months of inventory has historically been considered to be a “balanced” market.
The median sale price for existing-homes fell 6.0 percent in September from $212,100 to $199,200 but remains up 11.7 percent year-over-year versus 14.7 percent in August. Distressed sales in September accounted for 14 percent of sales volume, up from 12 percent in August and versus 24 percent at the same time last year.
Existing-home sales in the west rose 1.6 percent from August to September versus an unadjusted 20.9 percent drop in San Francisco, up 7.8 percent on a year-over-year basis versus a 1.0 percent drop in San Francisco with a median sales price that’s 16.8 percent higher year-over-year (10.1 percent in San Francisco).
Existing-Home Sales Down in September but Prices Rise [realtor.org]
Home Sales In San Francisco Slip Again In September [SocketSite]

4 thoughts on “Existing U.S. Home Sales Slip In September, Median Drops 6%”
  1. Home prices cannot rise faster than wages for an extended period without a correction.
    Until we start seeing true wage growth home prices will remain constrained.

  2. badlydrawnbear,
    Nationally and overall you are correct. But the devil is in the details.
    First remember that we’re talking about medians or averages. If the bottom 90% only see a marginal wage increase and the top 10% see a larger increase, the purchasing power of the top layers will have gone up without being fully reflected in the overall statistics. Plus someone’s loss in wage (say you lost a good construction job in 2008 and end up flipping burgers today for 1/2 the money) will hide someone’s else’s big pay raise.
    Also capital now plays as big a role in RE as mortgage financing. The stock market has doubled since the March 2009 bottom. That’s trillions over trillions of extra wealth (paper and real) in the country. It’s especially visible in the BA, with the GOOG, FB, AAPL and others who can afford more today than they could 4 years ago.
    With the limited supply the multiplying effect is quite remarkable. This bull market is probably 2 or 3 years to get to unsustainable levels I think. Then we’re in for a 2008 crash redux.

  3. I agree, and am often pulling out the ‘medians are not prices.’ comment.
    However, medians tend to have an upwards bias and to get the median to fall 6% nationally would be difficult (although not impossible) without a drop in prices also occurring.
    While there are plenty of newly minted ‘gazillionaires’ there are also plenty of car dwellers living.
    Given the rapid drop in affordability in the Bay Area without some major wage increase for the majority of people who work outside of tech things home prices are likely to correct. When? I have no idea.
    But stories like these suggest sooner rather than later.
    West Oakland hyper gentrification in the WSJ
    http://www.sfbg.com/politics/2013/08/14/west-oakland-hyper-gentrification-wsj
    East Bay median home price growth crushes San Francisco
    http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/09/east-bay-home-prices-san-francisco.html
    Palo Alto’s Last Mobile Home Park Faces Shutdown: Where Will Residents Go?
    http://blogs.kqed.org/newsfix/2013/07/29/palo-
    alto-mobile-homes
    Vehicle-Dwellers Call Palo Alto Home
    http://online.wsj.com/news/articles/SB10001424052702304022004577517022288672972

  4. I read that story about the crazy price increase in Oakland, but I’ll take one analogy: the breach in the dam. I think there were 2 of them.
    First dam burst:
    SF prices were pretty flat from early 2009 to late 2011. But that didn’t mean nothing was going on. The inventory backlog (visible and shadow inventory) was being churned through. The flow of money finished eating up the overhanging inventory in late 2011.
    The disappearing inventory is the famous
    “breach in the dam”. There wasn’t much more money hunting down property in March 2012 than in December 2011, the money flow being sustained at a pretty good and stable clip. But because of the dynamics of the RE market, SF saw increases of 20-30-40% almost everywhere in 2012. And the breach increased by itself. Rapidly increasing prices motivated buyers who were on the sidelines, could afford a place and feared they were missing out. Inventory disappeared, people got desperate and confident at the same time, leading to the 2012-2013 run-up.
    That’s the first dam burst.
    Second dam burst:
    This one is regional. The EB suffered a lot more than SF during the RE crash. Prices collapsed by 50 to 70% and many many more homes were lost due to foreclosure. The overhanging inventory to go through was overwhelming. Just like SF, it was being churned away consistently but surplus inventory lasted until late 2012, one year after SF.
    Now there’s a direct connection between prices in SF and the EB. It often takes less time to commute from Oakland to the FiDi than from Ocean Beach or the Sunset. Many young couples who cannot afford 900K SFHs will jump after 400-500K homes in Oakland.
    Unaffordable housing in 2012 in SF led to the flight of many buyers looking for the next big value buys across the Bay.
    Then inventory collapsed in the EB. That’s the second dam breach.
    And it worked much faster and stronger than SF, because 1) when a similar house sells for 1/3 the price less 15 minutes away, you can bid it up with more confidence and 2) once the pattern of increase was pretty clearly unraveling in SF, EB investors and SF exiles just bid everything up to catch “affordable” places.
    Lots of words to say the EB had much more to catch-up.

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