Rapid Reaction: September Existing Home Sales

• September existing home sales rose 0.7 percent from August, to 5.39 million units (SAAR), breaking a stretch of three consecutive months of declines but still the second-lowest overall figure recorded so far this year. Sales fell year-over-year by 1.5 percent, the first annual decline since July 2016.
• The median price for all existing homes sold September was $245,100 (non-seasonally adjusted), up 4.2 percent from September 2016 and the 67th straight month of year-over-year gains.
• Inventory of homes for sale rose 1.6 percent from August, but was down 6.4 percent from a year ago, the 28th straight month of annual inventory declines.

It might be tempting to get overly excited by September's existing home sales gains, however small, especially after three disappointing months in a row and in the wake of a string of incredibly disruptive hurricanes. But focusing on the short-term distracts from the bigger picture. Sales fell year-over-year for the first time since last July, and the reason is abundantly clear: It’s simply impossible to sell more homes when the number of homes for sale keeps falling. And the parts of the market most in need of more homes for sale, the low-to-middle segments, are also those experiencing the biggest inventory shortfalls. The laws of supply and demand are clear – low supply and high demand push prices up, making it even more difficult for first-time buyers and buyers of modest means to gain a foothold in the market.  The housing market right now is a lot like an express train that has left the station. For those homeowners already on board, able to use the equity in their own homes and historically low mortgage interest rates to afford to trade up into higher market segments where there is more selection, the ride is relatively smooth. But for those entry-level and first-time buyers waiting at the platform, getting on the train before it passes is incredibly difficult.