December 15th, 2015

US existing home sales spike to fastest rate since 2006 as housing-market boom accelerates further

Home for saleFREDERIC J. BROWN / Contributor/Getty Images

Summary List Placement
  • Sales of previously owned homes leaped 9.4% in September to a seasonally adjusted annual rate of 6.54 million, the National Association of Realtors announced Thursday.
  • The reading marks the fourth-straight month of accelerating sales, and the latest rate is the fastest since 2006.
  • Economists surveyed by Bloomberg expected the sales rate to climb to 6.3 million from August's revised 5.98 million.
  • The US housing market has served as a bright spot in the slowing economic recovery as record-low mortgage rates drive more Americans to buy units.

Existing-home sales in the US beat expectations in September as historically low mortgage rates further fueled the housing market's rally.

Sales surged 9.4% to a seasonally adjusted annual rate of 6.54 million last month, the National Association of Realtors announced Thursday. That pace is the fastest since 2006 and comes after four consecutive months of acceleration in sales. It also stands 21% higher from the year-ago period.

Economists surveyed by Bloomberg expected the rate to climb to 6.3 million. August's pace of sales was revised lower to 5.98 million.

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"Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season," Lawrence Yun, NAR's chief economist, said in a statement.

The median price for previously owned homes climbed 14.8% from the year-ago period to $311,800. Prices rose in all four regions of the country.

Total inventory sank 1.3% to 1.47 million, down 19.2% from the year-ago period. The count supports another 2.7 months of sales should the current pace continue. That represents the tightest supply on record.

The housing market has served as a bright spot during the slowing US economic recovery. The Federal Reserve's plan to maintain near-zero interest rates for years dragged on mortgage rates and spurred increased demand for homes.

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The average 30-year fixed mortgage rate sank to 2.8% this week, the lowest level in Freddie Mac data going back nearly 50 years. The reading also marked the 11th record low for the average rate this year.

The Thursday report suggests home sales will continue to skyrocket through the end of the year after rallying in the summer. Though the boost has lifted homebuilder sentiment to a record high, contractors are struggling to keep up with demand. Lot shortages and heightened supply costs present some near-term hurdles.

Still, single-family housing starts leaped 8.5% to a rate of 1.11 million units per month in September, according to the Commerce Department. Multi-family housing starts, however, tumbled 16.3% to a pace of 307,000 units. The disparity could play a role in the extended climb in median prices, as single-family homes typically cost more. 

Sales of newly built homes will be released on Monday.

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