Existing home sales picked up in September, reaching their highest pace on an annualized basis of the year, helped along with a price drop of nearly five percent to launch the fall season.

Median price fell from $219,800 in August was $209,700, a drop of 4.8 percent but still 5.6 percent above the levels of a year ago. The price drop help sales increase 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August. Sales are now at their highest pace of 2014, but still remain 1.7 percent below the 5.26 million-unit level from last September, according to the National Association of Realtors.

In the luxury segment, price cutting also has picked up with the end of the spring-summer season.  Some 39 percent of luxury properties that are currently listed have experienced price reductions compared to 32 percent in May, at the height of the spring season when demand was stronger.  According to the Institute for Luxury Home Marketing, luxury sales recently crossed over into “buyers’ market” territory.

Other signs that the seasonal Autumn softening of demand has arrive included the latest data on mortgage applications from tthe Morgage Bankers Association. which  reported that its Purchase Index decreased 5% from one week earlier and was 9% lower than the same week one year ago. NAR reported time on market is growing:  properties typically stayed on the market in September longer (56 days) than last month (53 days) and a year ago (50 days).

Total housing inventory³ at the end of September fell 1.3 percent to 2.30 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace. Despite fewer homes for sale in September, unsold inventory is still 6.0 percent higher than a year ago, when there were 2.17 million existing homes available for sale, according to NAR.

All-cash sales were 24 percent of transactions in September, up slightly from August (23 percent) but down from 33 percent in September of last year. Individual investors, who account for many cash sales, purchased 14 percent of homes in September, up from 12 percent last month but below September 2013 (19 percent). Sixty-three percent of investors paid cash in September.

The percent share of first-time buyers continues to underperform historically, remaining at 29 percent for the third consecutive month. First-time buyers have represented less than 30 percent of all buyers in 17 of the past 18 months.

Short sales were on the market for a median of 116 days in September, while foreclosures sold in 59 days and non-distressed homes typically took 55 days. Thirty-five percent of homes sold in September were on the market for less than a month.

Single-family home sales rose 2.0 percent to a seasonally adjusted annual rate of 4.56 million in September from 4.47 million in August, but remain 1.9 percent below the 4.65 million pace a year ago. The median existing single-family home price was $210,300 in September, up 5.9 percent from September 2013.

Existing condominium and co-op sales increased 5.2 percent to a seasonally adjusted annual rate of 610,000 units in September from 580,000 in August, and are unchanged from the 610,000 unit pace a year ago. The median existing condo price was $205,200 in September, which is 3.2 percent higher than a year ago.

Regionally, September existing-home sales in the Northeast climbed 1.5 percent to an annual rate of 680,000, but remain 1.4 percent below a year ago. The median price in the Northeast was $249,800, which is 4.8 percent higher than a year ago.

In the Midwest, existing-home sales declined 5.6 percent to an annual level of 1.17 million in September, and remain 4.9 percent below September 2013. The median price in the Midwest was $165,100, up 4.9 percent from a year ago.

Existing-home sales in the South increased 5.0 percent to an annual rate of 2.12 million in September, and are now 1.4 percent above September 2013. The median price in the South was $180,900, up 5.1 percent from a year ago.

Existing-home sales in the West jumped 7.1 percent to an annual rate of 1.20 million in September, but remain 4.0 percent below a year ago. The median price in the West was $294,200, which is 4.0 percent above September 2013.