Sales reached their highest monthly rate in 14 years, as median sales prices register double-digit gains over 2019.
By Manuel Gutierrez, NKBA Consulting Economist
Sales of existing homes jumped in September by 9.4% over August to reach an annual rate of 6.5 million units. This exceeds the sales rate in any month since June 2006. The COVID-19 pandemic and shutdown of businesses, the continuing threat of further closures, and more companies extending the “work from home” practice into next year have convinced consumers that this could be a good time to purchase a home.
September home sales were also nearly 21% higher than a year ago, as illustrated by the chart below.
Despite last month’s considerable jump, year-to-date sales are still marginally lower than the same period last year. Through September, a total of 4.04 million existing homes have been sold — 7,000 fewer than the same period last year.
On a monthly basis, the chart below shows the pandemic’s impact on existing home sales, with the red line showing this year’s sales had fallen well behind last year’s, primarily in April and May, before punching ahead.
All four major U.S. regions participated in the sales boom with substantial gains for each. The biggest percentage increase was in the Northeast, with sales gains exceeding 16%, although the region’s sales account for just one in eight homes sold in the U.S.
The South, which generates the most home sales, rose by 8.5% in September to an annual rate of 2.28 million units.
Despite robust sales numbers, the potential remains capped due to a stubbornly low inventory of available homes. There were just 1.47 million existing homes for sale in September — 20,000 fewer than the preceding month. The current inventory levels are not even sufficient enough to meet the needs for three full months at the current sales pace, as illustrated by the chart on the right below.
Low inventory combined with high home demand are pushing prices up. The average price of all existing homes rose to $343,000 in September, 11.6% higher than the year before.
The median sales price is also significantly higher than last year, at $312,000. That’s 15% above what it was in 2019. In fact, median home prices had double-digit gains in all four regions. They range from a 13% gain in the South, to $267,000, to 18% in the Northeast, increasing to $355,000. The West’s median sales price of $471,000 — more than $100,000 above the next closest region — rose by 17%. Meanwhile, the Midwest, which was last in median home sales price at $243,000, climbed 15% above the previous year.
