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September home sales, housing starts decline

September home sales, housing starts decline

New and existing-home sales both fell in September, according to news releases from the National Association of Realtors and the U.S. Census Bureau.

Total existing-home sales reached 5.15 million in September, representing a 3.4 percent decline from August. When national home sales decline, there's often at least one region that stayed the same or increased slightly, but this was not the case in September; all four regions of the U.S. saw falling sales. New home sales dipped 5.5 percent compared to August's figures, bringing the total number of new homes sold in September to 553,000.

Both statistics represent some of the lowest sales volume in recent months. According to the U.S. Census Bureau's 12-month chart of seasonally adjusted new home sales volumes, September's rate was the lowest in the past year. Meanwhile, Lawrence Yun, chief economist at the NAR, recalled the last time existing-home sales were comparably low:

"This is the lowest existing home sales level since November 2015," he said. "A decade's high mortgage rates are preventing consumers from making quick decisions on home purchases."

Yun noted that high home prices are keeping many would-be buyers out of the market. The median existing-home sales price in September was $258,100, a 4.2 percent increase over September 2017. The median price for new homes was $320,000, though this is below September 2017's median price of $331,500.

Inventory impacts buying

Remaining inventory was recorded at 1.88 million for existing homes (a 4.4-month supply) and 327,000 for new homes (a 7.1-month supply).

"There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory," Yun explained. "Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year."

There are two basic ways inventory increases: More existing homes are put on the market, and new homes are completed. If homes stay on the market longer than typical, as Yun predicts, this could improve inventory.

Housing completions in September were 4.1 percent lower than August's figures, coming in at 1.16 million, according to the U.S. Census Bureau. The outlook doesn't appear to bring increased home construction projects, either: Housing starts were 5.3 percent below August at 1.2 million, and building permits dropped 0.6 percent from August to 1.24 million. This could be reflective of the changing season, when construction is less feasible in colder areas of the country.

Before you make an offer on a home, be sure you're prepared. Reach out to The Federal Savings Bank to get started with the mortgage preapproval process.