From the NAR: Existing-Home Sales Ascend 7.0% in September

Existing-home sales rebounded in September after seeing sales wane the previous month, according to the National Association of Realtors®. Each of the four major U.S. regions witnessed increases on a month-over-month basis. From a year-over-year timeframe, one region held steady while the three others each reported a decline in sales.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 7.0% from August to a seasonally adjusted annual rate of 6.29 million in September. However, sales decreased 2.3% from a year ago (6.44 million in September 2020).
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Total housing inventory at the end of September amounted to 1.27 million units, down 0.8% from August and down 13.0% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the present sales pace, down 7.7% from August and down from 2.7 months in September 2020.
emphasis added

The sales rate was above the consensus forecast.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in September (6.29 million SAAR) were up 7.0% from last month, and were 2.3% below the September 2020 sales rate.

Some of the increase in sales since the beginning of the pandemic was probably related to record low mortgage rates, strong second home buying, a strong stock market and favorable demographics.

Also, the delay in the 2020 buying season pushed the seasonally adjusted number to very high levels over the winter. This means there are going to be some difficult comparisons in the last quarter of 2021!

The second graph shows existing home sales by month for 2020 and 2021.

This was the second month this year with sales down year-over-year. This should continue through the rest of the year, since sales averaged 6.7million SAAR over the last three months of 2020.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), since 2005.

Sales NSA in September (548,000) were 2.7% below sales in September 2020 (563,000). Excluding last September (distorted by the delayed selling season), sales NSA were the strongest since 2005!

Housing Inventory is Very Low

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.27 million in September from 1.28 million in August. Inventory usually declines seasonally in October, and then decreases significantly in November and December as potentially sellers remove their homes from the market for the holidays. Although inventory is up from the lows last winter, inventory is still very low.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory is very low, and was down 13.0% year-over-year (YoY) in September. Also, as housing economist Tom Lawler has noted, the local MLS data shows even a larger decline in active inventory (the NAR appears to include some pending sales in inventory). Lawler noted:

"As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months."

It seems likely that active inventory is down close to 23% year-over-year.

Months-of-supply at 2.4 months is still very low, but above the record low of 1.9 months set in December 2020 and January 2021.

It is likely inventory will be up year-over-year sometime during the Winter months, but inventory will still be at very low levels.

House Price Growth Deceleration

On prices, the NAR reported:

The median existing-home price for all housing types in September was $352,800, up 13.3% from September 2020 ($311,500), as prices rose in each region.

Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices), but this is the fourth consecutive month with a deceleration in the median price. The NAR reported median prices were up 23.6% YoY in May, 23.4% in June, 17.8% in July, 14.9% in August and 13.3% in September. This deceleration will probably show up in Case-Shiller and the FHFA indexes very soon.

Finally, as usual, housing economist Tom Lawler's forecast was closer to the NAR report than the Consensus. The NAR reported 6.29 million SAAR, Lawler estimated the NAR would report 6.20 million SAAR, and the consensus was 6.09 million SAAR.

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Existing-Home Sales Increased to 6.29 million…