The headline existing home sales declined with the authors saying "A decade's high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.". Our analysis shows home sales three month rolling average is in contraction year-over-year.

Analyst Opinion of Existing Home Sales

The rolling averages have been slowing since the beginning of 2017. This month the rolling averages have slipped deeper into contraction. Housing inventory is historically low for September - and if you do not have enough houses for sale - then that means home sales cannot improve. Combine this with higher mortgage rates - and home sales are declining.

Econintersect Analysis

• Unadjusted sales rate of growth decelerated 9.8 % month-over-month, down 9.1 % year-over-year - sales growth rate trend declined using the 3 month moving average.
• Unadjusted price rate of growth down 0.8 % month-over-month, up 2.5 % year-over-year - price growth rate trend again marginally slowed using the 3 month moving average.
• The homes for sale unadjusted inventory declined this month compared to last month, and remains historically low for Septembers, but is up 1.0 % from inventory levels one year ago).

NAR reported:

• Sales down 3.4 % month-over-month, down 4.1 % year-over-year.
• Prices up 4.2 % year-over-year - rate of growth is slowing.
• The market (from Econoday) expected annualized sales volumes of 5.230 M to 5.380 M (consensus 5.300 million) vs the 5.15 million reported.

The graph below presents unadjusted home sales volumes.

Here are the headline words from the NAR analysts:

Lawrence Yun, NAR chief economist, says rising interest rates have led to a decline in sales across all regions of the country. "This is the lowest existing home sales level since November 2015," he said. "A decade's high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country."

"There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory," said Yun. "Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year."

"Rising interests rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory," says Yun.

"Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range," said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. "Entry-level homes remain highly sought after, as prospective buyers are advised to contact a Realtor® as early in the buying process as possible in order to ensure buyers can act fast on listings that catch their eye."

To remove the seasonality in home prices, here is a year-over-year graph which demonstrates a general improvement in home price rate of growth since mid-2012 - however a slowing growth trend is developing.

Econintersect does a more complete analysis of home prices with the Case-Shiller analysis.

The home price situation according to the NAR:

The median existing-home price for all housing types in September was $258,100, up 4.2 percent from September 2017 ($247,600). September's price increase marks the 79th straight month of year-over-year gains.

According to the NAR;

First-time buyers were responsible for 32 percent of sales in September, up from last month (31 percent) and a year ago (29 percent). NAR's 2017 Profile of Home Buyers and Sellers - released in late 20174 - revealed that the annual share of first-time buyers was 34 percent.

All-cash sales accounted for 21 percent of transactions in September, up from July and a year ago (both 20 percent). Individual investors, who account for many cash sales, purchased 13 percent of homes in August, unchanged from July and down from 15 percent a year ago.

Unadjusted Inventories are below the levels of one year ago.

Total housing inventory at the end of September decreased from 1.91 million in August to 1.88 million existing homes available for sale, and is up from 1.86 million a year ago. Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.3 last month and 4.2 months a year ago.

Caveats on Use of NAR Existing Home Sales Data

The National Association of Realtors (NAR) is a trade organization. Their analysis tends to understate the bad, and overstate the good. However, the raw (and unadjusted) data is released which allows a complete unbiased analysis. Econintersect analyzes using the raw data. Also note the National Association of Realtors (NAR) new methodology now has moderate back revision to the data - so it is best to look at trends, and not get too excited about each month's release.

Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).