First-Time Home Buyers Finally Jumping into the Market
One of the big headwinds of the housing market nationwide has been the lack of first-time home buyers – millennials in particular. But the market got a bit of good news on that front last month as a surge in first-time buyers resulted in existing-home sales nationally rebounding strongly in September, according to the National Association of REALTORS® (NAR).
Total existing-home sales – single-family homes, townhomes, condominiums and co-ops – rose 3.2 percent to a seasonally adjusted annual rate of 5.47 million in September from 5.30 million in August. After last month’s gain, home sales are at their highest pace since June and are 0.6 percent above a year ago.
While the gains alone weren’t huge, what was interesting is that first-time buyers were primarily responsible for the increase. In fact, 34 percent of the purchases were by new buyers, the largest percentage in more than four years, according to NAR. All major regions saw an increase in closings last month, and distressed sales fell to a new low of 4 percent of the market.
The lack of inventory of homes on the market continues to be a challenge, according to Lawrence Yun, NAR chief economist.
“The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale,” Yun said in a news announcement.
“Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month,” he added.
The median existing-home sale price nationwide for all housing types in September was $234,200, up 5.6 percent from September 2015 – the 55th consecutive month of year-over-year gains.
Total housing inventory at the end of September rose 1.5 percent to 2.04 million existing homes for sale, but is still 6.8 percent lower than a year ago and has now fallen year-over-year for 16 straight months.
“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in,” added Yun. “Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand.”