Sales and prices of existing U.S. homes fell in September from August, according to the National Association of Realtors, but both continued to rise on a yearly basis.
Existing-home sales slumped 1.9 percent last month to seasonally adjusted annual rate of 5.29 million, down from 5.39 million in August, but rose 10.7 percent from September 2012’s pace. Sales have now increased on a year-over-year basis for 27 consecutive months.
Meanwhile, the median price for an existing-home dropped to $199,200 in September, down from $209,700 the month before. Yet compared with the previous year, the price is 11.7 percent, marking the 10th straight month of double-digit annual gains. And that could spell trouble for buyers.
“Affordability has fallen to a five-year low as home price increases easily outpaced income growth,” said Lawrence Yun, NAR chief economist in a press release. “Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown.”
Freddie Mac reported that the average rate on a 30-year conventional, fixed rate mortgage grew to 4.49 percent last month, the highest average in over two years, and up from 4.46 percent in August.
Distressed properties made up just 14 percent of all sales in September, up from 12 percent in August, but far below the 24 percent from a year earlier. The dwindling inventory of foreclosures and short sales is part of the reason prices are increasing. For example, Detroit, an area that was hit hard by the housing bust, has now cleared out enough foreclosure inventory that home prices were able to rise 44.6 percent in September form the year before. Similarly Las Vegas home prices gained 30.7 percent and Sacramento prices jumped 28.9 percent.
With the Federal Reserve decided this week to continue as planned with their bond purchases, interest rates may remain stable at least through the rest of this year and prices may not climb quite as fast through the holiday season.