Sales of previously owned homes declined on an annual basis for the first time since July 2016, suggesting a chronic shortage of homes for sale is beginning to take a bigger toll on the market.
September's existing-home sales fell 1.5% from the same month a year earlier, the National Association of Realtors said Friday, the third consecutive month of lackluster results.
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"It was a continuation of this theme of low inventory really being the burr in the saddle of this housing market," said Daren Blomquist, senior vice president of communications at ATTOM Data Solutions.
On a monthly basis, existing-home sales edged up by 0.7% to a seasonally adjusted annual rate of 5.39 million in September from August. But the small uptick was largely due to a modest rebound in Houston home sales, which were up 4% after a large drop in August.
September's sales pace was still the second-slowest in the past year. In August, existing-home sales fell to the lowest level in a year, mostly due to a sharp drop in home sales in Houston in the wake of Hurricane Harvey and a shortage of homes on the market. The weak performance over the past couple of months belied strong job and wage growth numbers and increasing demand from first-time buyers.
"It's an uptick over a really weak month," said Svenja Gudell, chief economist at home-search website Zillow. "Given...a really low August, you would expect September to be a little bit stronger, which leaves me with a lackluster, eh."
Cindy Hamann, chair of the Houston Association of Realtors, said some Houston sales that were set to close in late August were delayed until September, which helped boost last month's numbers.
"October is really going to be the telltale of what's going on," she said. Agents she talks to are still busy, she said, and homes are selling along as they are priced well. "I want to say that we're going to keep on keeping on."
Homes in Houston sold at 96% of their estimated market value in August, according to ATTOM, the lowest percentage since January 2014, indicating that sellers might have started discounting to get their homes to sell.
Hurricane Irma, which battered parts of Florida in September, took a toll on home sales. Lawrence Yun, NAR's chief economist, said sales there dropped by roughly 20%, but it wasn't enough to drag down numbers for the south overall.
Across the U.S., inventory has been tight recently, in part because of lackluster home construction, which has contributed to a run-up in home prices. The median price of homes sold last month rose to $245,100 in September, up 4.2% from a year earlier.
At the current sales pace, it would take 4.2 months to exhaust the supply of homes on the market. That is down from 4.5 months during the same period last year, reflecting the tightening housing market.
Mr. Yun said the shortage of homes could last into next year. "Housing starts are only incrementally slowly rising, but because of the hurricane and the rebuilding efforts there... the construction workers will be rebuilding, and that means less workers available for new home construction," he said.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
Some economists are skeptical, however, that a lack of inventory is the sole explanation for sluggish home sales. "It's a late-cycle economy," said Doug Duncan, chief economist at Fannie Mae. Slowing sales "happen in housing before there's a downturn."
--Sharon Nunn contributed to this article.
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(END) Dow Jones Newswires
October 20, 2017 14:07 ET (18:07 GMT)