US existing home sales rise to 14-year high

New York

SALES of previously-owned US homes rose more than expected in September to the highest level in 14 years, as a desire for more space and record-low mortgage rates continue to support demand.

Contract closings increased 9.4 per cent from the prior month to an annualised 6.54 million, the fastest pace since May 2006, after a downwardly revised 5.98 million in August, National Association of Realtors (NAR) data released on Thursday showed.

The median forecast in a Bloomberg survey of economists called for a 6.3 million rate in September. Single-family home sales outpaced purchases of condominiums.

The figures, which included record selling prices and leaner inventory, reinforce other data showing a booming housing market that is a key source of fuel for the economy.

With the pandemic forcing many Americans to work and learn from home, demand for single-family properties has soared at the same time record-low mortgage rates have lured more buyers.

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Housing "is clearly much better than a V-shaped recovery so it's not only about recovering but well surpassing what was happening prior to the pandemic", said Lawrence Yun, NAR's chief economist.

At the same time, "home prices are simply rising too fast due to insufficient supply and very strong demand". Properties remained on the market for just 21 days in September, an all-time low and down from 32 days in the same month last year, NAR said.

Available inventory declined 19.2 per cent from a year earlier to 1.47 million units, the fewest for any September on record, NAR's data showed. At the current pace, it would take 2.7 months to sell all the homes on the market, the lowest on record. Realtors see anything below five months of supply as a sign of a tight market.

The median selling price increased 14.8 per cent in September from a year earlier to a record US$311,800.

Homebuilders are working to keep up with demand amid lean supply. Single-family housing starts are at the highest since 2007, and a measure of homebuilder sentiment is at a record high. Sales of previously owned one-family homes rose 9.7 per cent to a 5.35 million pace, the fastest since April 2006.

The NAR report showed that purchases of existing homes increased in all four US regions, including an 8.5 per cent gain in the South to an all-time high, and a 9.6 per cent jump in the West.

Said Mr Yun: "I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home."

Existing-home sales account for about 90 per cent of US housing and are calculated when a contract closes. BLOOMBERG