The National Association of Realtors reported “another strong gain” in existing home sales last month, up from a 4.12 million annual rate in August to 4.53 million in September, a gain of 10.0 percent. As shown in the chart below, what we’re now seeing is the expected rebound from historic lows seen over the summer, that is, after the government stopped paying people to buy houses, the September sales total being one of the lowest in history.
The months of supply metric dropped from 12.5 to 10.7, about double the long-term average, which helps to explain why home prices are again falling, down from $178,600 to $171,700, a drop of almost four percent in a single month. Yikes! A better (though lagging) gauge of home prices will be available tomorrow when the S&P Case Shiller Home Price Index is released, but it does appear that home price declines are now accelerating.