• Existing home sales rose 4.7 percent month-over-month in September, to 5.55 million units (SAAR), reversing almost all of August’s 5 percent decline.
• The median price of existing homes sold in August increased 2.1 percent to $222,000, breaching the $221,000 mark for the first time since April 2007.
• If prices continue to grow at their average pace over the past year, they could hit all-time highs by early next summer; if they continue to grow at their breakneck September pace, they could reach all-time highs by February.

Existing home sales rebounded in September after a disappointing August, rising 4.7 percent to 5.55 million units at a seasonally adjusted annual rate (SAAR), according to the National Association of Realtors, almost erasing the 5 percent drop recorded in August (figure 1). Year-over-year, home sales were up 8.8 percent last month, among the fastest annual growth rates recorded over the past two years.

August home sales were revised downward to 5.3 million units (SAAR) from 5.31 million units – deepening the percent drop between July and August to 5.0 percent from 4.8 percent. In hindsight, the August decline seems increasingly anomalous compared to recent months, but is in line with August results from recent years. Over the past few years, August has tended to be a month when sales pull back somewhat: In August of 2013, 2014 and now 2015, existing home sales have declined in August after strong increases in July. Like 2015, a weak August was followed by a strong September in 2014.

Sales increased in all four national regions, with the Northeast and West reporting the strongest month-over-month jumps (up 8.6 percent and 6.7 percent in September from August, respectively). Compared to September 2014, sales are up the most in the Midwest (up 12 percent) and West (up 11.8 percent) with the South (up 5.7 percent) showing the weakest annual growth rate. The South has posted the slowest year-over-year growth in sales among the major U.S. regions in four of the past five months.

After dipping in late spring through the early summer, the median price of existing homes sold continued its upward trend in September, rising 2.1 percent from August to $222,000 – near the fastest monthly growth pace in prices since the housing market recovery began. Between May and July, the median price of existing homes sold fell 2 percent, from $220,800 in May to $216,400 in July, suggesting that more entry-level buyers were (at long-last) returning to the market. First-time homebuyer data backs up this theory – in August, 32 percent of existing homes were sold to first-time buyers, up from 29 percent in September 2014.

But this retreat in prices proved short-lived, and the median sales price is now up 2.6 percent from its July lows – breaching the $221,000 mark for the first time since April 2007. At the same time, the share of first-time buyers fell back to 29 percent in September. Existing home prices are now just 3.7 percent below their pre-Recession peak of $230,600 (October 2005). If prices continue to grow at their average pace over the past year, they could hit all-time highs by early next summer; if they continue to grow at their breakneck September pace, they could reach all-time highs by February.