Lawler: Early Read on Existing Home Sales in September

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 6.38 million in September, up 6.3% from August’s preliminary pace and up 17.9% from last September’s seasonally adjusted pace. Unadjusted sales should show a larger YOY increase, reflecting this September’s higher business day count relative to last September’s.

Local realtor/MLS data suggest that the median US existing single-family home sales price last month was up by a steamy 13.2% from last September , partly reflecting the mix of home sales but mainly the unprecedentedly low available inventory of homes for sale (partly pandemic combined with a surge in demand for SF homes (also partly pandemic related).

On the inventory front, local relator/MLS reports, as well as reports from entities that track residential listings across the country, indicate the YOY decline in inventories last month exceeded the previous month’s sharp drop. How this will translate into the NAR’s inventory estimate, however, is unclear. As I noted last month, most publicly-available local realtor/MLS reports show inventories excluding listings with pending contracts. That is not always the case, however, for the reports send by realtors/MLS to the NAR. Given the surge in pending listings over the several months, there is a huge difference between inventory measures including pending listings and those excluding pending listings.
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With significantly fewer (relative to a year ago) single-family detached homeowners listing their homes for sale (which is definitely related to the pandemic) and significantly more householders shifting preferences from urban rental/multi-unit property living to single-family detached living (also definitely pandemic-related), the net result has been a plunge in “supply” relative to “demand.” When one then factors in the sizeable decline in mortgage rates this year, it perhaps is not too surprising that single-family detached home process are rising so rapidly.

It is also not too surprising that rents in many areas of the country, and especially in large densely populated cities, have declined significantly over the past few months.

CR Note: The National Association of Realtors (NAR) is scheduled to release September existing home sales on Thursday, October 22, 2020 at 10:00 AM ET. The consensus is for 6.25 million SAAR.