Existing Home Sales Surge

Existing home sales surged 3.2 percent in September to a 5.470 million annualized rate that exceeds Econoday's high estimate. The key single-family component leads the report, up 4.1 percent to a 4.860 million rate while condos, where choices are limited and permits for new building are on the rise, fell 3.2 percent to a 610,000 rate.

Home owners have been reluctant to put their homes on the market though supply did rise in the month to 2.040 million from 2.010 million. But supply on a monthly basis, given the rise in sales, fell to 4.5 months from 4.6 months.

Prices have not been firm which helps explain both the lack of supply and also the rise in sales. The median fell 2.4 percent in the month to $234,200 though year-on-year appreciation remains on trend at plus 5.6 percent.

Other important details include a record low for distressed sales, at 4 percent of all transactions, and a solid 34 percent showing for first-time buyers which points to rising traffic and likely reflects the rising cost of rentals.

Regionally, September sales were strongest in the West, up 5.0 percent for a year-on-year gain of 1.6 percent, and in the Midwest, up 3.9 percent on the month for a year-on-year plus 2.3 percent. Total year-on-year resales are up but only fractionally, at plus 0.6 percent.

The new home market has been accelerating strongly and may now be lifting the resale market. Though price appreciation is no better than the 5 percent area, housing is in fact a leading strength for the consumer.

Recent History Of This Indicator:
Existing home sales have not been showing the strength of new home sales and forecasters see little change for September, at a consensus 5.350 million annualized rate in what would only be a 0.4 percent gain. And the consensus may even be optimistic given what was a 2.4 percent drop in the pending home sales report. Prices are no better than stable, showing little boost from thin supply on the market.