Existing Home Sales Rise First Time Since May: Hurricane Impacts Abate, NAR Begs for Subsidies

Existing home sales rose 0.7 percent, the first increase since May. The NAR reported 5.39 million sales at a seasonally adjusted annualized rate (SAAR) topping the Econoday consensus estimate of 5.30 million sales.

It was only a small gain, albeit larger than analysts expected, but after three straight months of sliding sales, the existing home sales report for September is still good news. NAR noted that "Ongoing supply shortages and recent hurricanes muted overall activity." This meant that even as sales were higher compared to August, they were down 1.5 percent year-over-year and were the second slowest of the year, trailing only those in August.Analysts polled by Econoday were looking for sales in the range of 5.1 to 5.4 million. The consensus was for 5.3 million units.Lawrence Yun, NAR chief economist, noted that September was the first time that sales had declined on an annual basis since July 2016. "Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country," he said. "Realtors this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings - especially at the lower end of the market - and fast-rising prices that are straining the budgets of prospective buyers."There were an estimated 1.90 million existing homes for sale at the end of September, a 1.6 percent increase from August, but 6.4 percent fewer than the 2.03 million available for sale a year ago. The inventory has now fallen year-over-year for 28 consecutive months. Unsold inventory is estimated at a 4.2-month supply at the current sales pace, which is down from 4.5 months a year ago.Added Yun, "Sales activity likely would have been somewhat stronger if not for the fact that parts of Texas and South Florida - hit by Hurricanes Harvey and Irma - saw temporary, but notable declines." The median existing-home price for all housing types in September was $245,100, up 4.2 percent from the September 2016 median of $235,200. September's price increase marks the 67th straight month of year-over-year gains. The median existing single-family home price was $246,800, a 4.2 percent annual increase while condo prices were up 4.1 percent to a median of $231,300.The share of first-time buyers slipped again, from 31 percent in August to 29 percent, matching the lowest share since September 2015. Last September 34 percent of sales were to first-timers.

NAR Begs for Subsidies

NAR President William E. Brown, says Congress should keep in mind the barriers affecting prospective first-time buyers as they move forward with tax reform in the coming months. "There's no way around the fact that any proposal that marginalizes the mortgage interest deduction and eliminates state and local tax deductions essentially disincentives homeownership and is a potential tax hike on millions of middle-class homeowners," he said. "Reforming the tax code is a worthy goal, but it should not lead to the middle class, who primarily build wealth through owning a home, footing the bill. Instead, Congress should be looking at ways to ensure more creditworthy prospective buyers are able to achieve homeownership and enjoy its personal and wealth-building benefits."

Case Against Subsidies

  • Hundreds of affordable home programs made housing more expensive.
  • Government promotion of the "Ownership Society" fueled the housing bubble and led to the collapse of Fannie Mae.
  • Student loan programs made college education more expensive.
  • Obamacare made medical care more expensive.

The share of first-time buyers dipped again because few can afford them. When prices were low, everyone, including the NAR begged government and the Fed to do something. Both did, and bankers made out like bandits as millions of homes entered a foreclosure process.

Now that home prices are back at bubble levels, the NAR wants more government interference.

Government has no business promoting home ownership over renting. Government interference distorts the free market, and that's always a bad thing.

MIke "Mish: Shedlock

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