Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4% in September to a seasonally adjusted annual rate of 5.17 million. This annual rate is 1.7% lower than the 5.26 million-unit level in September 2013.
Lawrence Yun, NAR chief economist, says the improved demand for buying seen since the spring has carried into the fall. “Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline,” he said. “Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline in choices due to the fact that inventory generally falls heading into the winter.”
“Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets, which will likely keep interest rates in upcoming weeks hovering near or below where they are now,” said Yun. “This is welcoming news for consumers looking to buy, although they could temporarily become more cautious by less certain economic conditions.”
The existing home sales rate in 3 of the 4 U.S. regions in September:
Northeast: 0.68 million from 0.67 million month prior.
Midwest: 1.17 million from 1.24 million month prior.
South: 2.12 million from 2.02 million month prior.
West: 1.20 million from 1.12 million month prior.
Total housing inventory at the end of September decreased 1.3% to 2.30 million existing homes available for sale. That represents a 5.3 month supply at the current sales pace. Unsold inventory is 6.0% above a year ago, when there were 2.17 million existing homes available for sale.
The median time on market for all homes was 56 days in September. That is up from 53 days in August. Short sales were on the market for a median of 116 days, while foreclosures typically sold in 53 days, and non-distressed homes took 59 days. 35% of homes sold in September were on the market for less than a month.
The national median existing home price for all housing types was $209,700, up 5.6% from a year ago.
As a large ship moved through the water, a helicopter overhead spotted an unidentified boat approaching and sent a warning to a small fleet of escort boats. Some were armed with loudspeakers, others with flashing lights, another with a .50 caliber machine gun.
Once the fleet zeroed in on the threatening vessel with radar and infrared sensors, some of the escort boats broke away and quickly encircled it. They flashed lights and blasted warnings through loudspeakers. Threat resolved.
All of the escort boats were unmanned—and yet they moved together as a group, thanks to what’s known as “swarm intelligence.”
While rising rates do translate into higher borrowing costs and often higher capitalization rates, which can lead to lower asset values, the notion that rising rates are categorically bad for real estate equities is somewhat overstated, and often incorrect. Rising rates tied to an improving economy, which is what we are seeing today in the U.S., can actually provide a constructive backdrop for the asset class. An improving economy typically means landlords benefit from better operating fundamentals – lower vacancy rates, higher lease rates and better acquisition/development yields.
There are numerous past periods when rates rose on the back of an improving economy and real estate performed well. In fact, during the five periods of rate increases since 2000, the MSCI U.S. REIT Index averaged a 1.2% return over the three months following the initial rate increase and a 14.7% return over the ensuing 12 months (outpacing the S&P 500 Index by more than 200 basis points).
U.S. industrial production increased 1.0% in September after having decreased 0.2% in August. At 105.1% of its 2007 average, total industrial production in September was 4.3% above its level of a year earlier.
The output of manufacturing increased 0.5% in September, production at mines increased 1.8%, and output of utilities rose 3.9%.
Capacity utilization for total industry decreased in September to 79.3%. That is 0.8% below its long-run (1972–2013) average.