Spurred on by a last minute rush to get in on the "first-time home buyer" tax credit, sales of existing homes jumped by 9.4% in September to a seasonally adjusted annual rate of 5.57 million, up from 5.10 million in both August and September of a year ago.
Rapidly plunging mortgage rates also played a role, with the average rate at 5.06% in September versus 5.16% in August and 6.04% a year ago. Both single-family homes and condos saw sharp increases in sales activity, with the rate of single-family sales rising to 4.89 million from 4.47 million in August (up 9.4%) and from 4.54 million a year ago (up 7.7%). Condo sales were up 9.7% on the month to an annual rate of 680,000, and they soared 21.2% from the annual rate of 561,000 a year ago.
Existing home sales are highly seasonal, as can be seen in the graph below (from http://www.calculatedriskblog.com/) and we are past the most active part of the year. However, not only were the actual non-seasonally-adjusted sales higher than the corresponding month a year ago higher for the fourth straight month, for the first time they were higher than two years ago.
Even better news was found on the inventory side, as the number of houses for sale fell 7.5% from last month to 3.63 million, which is also down 15.0% from a year ago. Combined with the higher sales rate, that put the months of supply at 7.8 months, down from 9.3 months in August.
This is a huge drop, but as can be seen in the second graph (also from http://www.calculatedriskblog.com/) we are still far above the 4 to 5 months level that was considered normal earlier in the decade. That was mostly bubble territory, so the real normal is more like 6 months of supply. We are getting there, but not there yet.
Regionally, all areas of the country did well. On a month-to-month basis the West was strongest with a 13.0% increase, followed by the Midwest (up 9.6%), the South (up 9.0%) and finally the Northeast, up 4.4%. On a year-over-year basis, though, the Northeast is actually the strongest (up 11.8%) followed by the South (up 10.8%) then the Midwest (up 7.8%) and then finally the West (up 5.7%).
The South is by far the most important region when it comes to housing, with Dixie responsible for 37.0% of all used home sales in September.
