Existing home sales in September of 2018 declined after the month of August was stagnant for sales. According to the National Association of Realtors, NAR, all four regions of the United States, Northeast, South, Midwest and West saw no gains in sales activity. You can search for homes in Florida to see how the market looks today by clicking on this link.

We may be seeing the end of the strong seller market that has lasted for several years.

The total of existing home sales in September declined by 3.4% from August, with a seasonally adjusted number of 5.15 million homes sold in September, which included townhouses, single family homes, condominiums and co-ops.  Comparing year ago sales for September of 2017, homes sales are down 4.1%, according to NAR, 5.37 million homes sold in September of 2017 vs. 5.15 million sold in September 2018.

Watch the video of NAR's chief economist, Lawrence Yun, deliver the housing news.

Getting into some numbers, this report discussed the impact of first time home-buyers.  Of all homes purchased in September 2018, 32% were first time home-buyers, compared to 31% a year ago.

Interest rates have edged upwards in the past year as well, according to Freddie Mac. Mortgage rates in September 2018 averaged 4.63%, August was 4.55% and September of 2017 interest rates were 3.99%. These are still near historic low rates for mortgages, so why the fuss?  Roughly speaking, this 0.64% increase in mortgage rates translates to a reduction of about 6.4% in purchasing power. In real numbers, this means that a buyer who qualified for a $200,000 mortgage a year ago, now qualifies for a house worth $187,200. This means that the buyer may not be able to buy a home in the neighborhood she wanted, meaning she may not be able to send her children to the school she wants, or even may have a longer commute to work.

In September 2018, cash sales made up 21% of all transactions. This is a very difficult market for first time buyers who need a mortgage and have to compete with cash buyers. According to Elizabeth Mendenhall, NAR president, first time home-buyers continue to underwhelm the market for the simple reason that there are not enough homes on the market in their price range.

Some good news on home sales is that the percentage of distressed properties, short sales and foreclosures, made up only 3% of sales in September, the lowest number since NAR began tracking this data in 2008, as the market crashed.  According to NAR, 2 percent of home sales in September were foreclosures, 1% were short sales.

The biggest drop in existing home sales was in the south, 5.4% decrease in home sales from September 2017. The Midwest showed flat home sales from September 2017 and that was the only market that did not show a decrease in sales year on year.

Buyers currently feel that housing prices are too high and are deciding to hold off on purchasing a home until there is a decrease in prices. Many first time home buyer are holding off for the same reasons.

Renovating seems to be a growing trend with potential buyers. According to the real estate blog, Keeping Current Matters, the overall average of buyers choosing renovation over buyers is 76%, with age breakdowns going as follows.  18-34 years, 66% are opting for renovation; 35-54 years opt for renovation 73% of the time; and 55+ year olds opt for renovation 87% of the time, instead of tying up their finances in a new mortgage. They feel they can protect their retirement income this way.

The tight inventory of available homes for sale is helping to keep sales figures low.  Again, according to NAR, housing inventory is beginning to creep up. This will create more competition for sellers to deal with, as buyers are beginning to see more homes to choose from.  The national market continues to favor sellers, for now, however, it is becoming closer to a neutral market which will give buyers more leverage in negotiations.  

Stay tuned for more information on the economics of the housing market in the coming weeks and months as most experts are predicting a recession in mid to late 2020.  This will impact housing, although they do not feel housing will be the driver of the coming recession as it did in the crash of 2008.