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Tuesday, October 28, 2014

September 2014 U.S. Home Sales, Inventory and Prices

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Sales of new single-family homes in September edged up by 1,000 units (0.2 percent) relative to the previous month, to a seasonally adjusted and annualized rate (SAAR) of 467,000 -- a six-year high. Data for August was revised down from 504,000 to 466,000 units. Sales in September were 22.6 percent above year-earlier levels. Meanwhile, the median price of new homes sold fell $27,800 (-9.7 percent) to $259,000. Although single-family starts rose faster than sales in September, the three-month average ratio of starts to sales dropped to 1.46. Click here for our post on September’s housing permits, starts and completions. 
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Single-unit completions increased by 6,000 units (1.0 percent) in September. New-home inventory expanded in absolute terms (+3,000 units) but was unchanged in months-of-inventory terms. 
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Existing home sales advanced in September, by 120,000 units (2.4 percent) to 5.17 million units (SAAR). With sales of new homes flat and existing homes rising, the share of total sales comprised of new homes slipped back to 8.3 percent. The median price of previously owned homes sold in September dropped again (by $8,700 or -4.0 percent) to $209,700. Inventory of existing homes inched lower in both absolute (-30,000 units) and months-of-inventory terms (0.2 month). 
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Housing affordability improved marginally in August because the median price of existing homes for sale fell by $1,900 to $220,600. Concurrently, Standard & Poor’s reported that the newly published U.S. National Index in the S&P/Case-Shiller Home Price indices posted a not-seasonally adjusted monthly change of +0.2 percent in August (+5.1 percent relative to a year earlier).
“The deceleration in home prices continues,” said David Blitzer, Chair of the Index Committee at S&P Dow Jones Indices. “The Sun Belt region reported its worst annual returns since 2012, led by weakness in all three California cities -- Los Angeles, San Francisco and San Diego. Despite the weaker year-over-year numbers, home prices are still showing an overall increase, as the National Index increased for its eighth consecutive month.
“The large extent of slower increases is seen in the annual figures with all 20 cities; the two composites and the national index all revealing lower numbers than last month. The 10- and 20-City Composites gained 5.5 percent and 5.6 percent annually with prices nationally rising at a slower pace of 5.1 percent. Las Vegas continues to see a sharp deceleration in their annual home prices with a 10.1 percent annual return, down just below 3 percent from last month. Miami is now leading the cities with a 10.5 percent year-over-year return. San Francisco, which has shown double-digit annual gains since November 2012, posted an annual return of 9.0 percent in August.
“Despite softer price data, other housing data perked up. September figures for housing starts, permits and sales of existing homes were all up. New home sales and builders’ confidence were weaker. Continued labor market gains, low interest rates and slower increases in home prices should support further improvements in housing. 
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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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