Purchases of existing homes rise in October
But sales down 5.1% from 2017
WASHINGTON — Sales of existing homes rose in October, breaking a sixmonth losing streak, the National Association of Realtors said Wednesday. But sales are still down from a year ago, hurt by rising interest rates.
The Realtors association said existing-home sales climbed 1.4 percent to a seasonally adjusted annual rate of 5.22 million last month. But October sales were down 5.1 percent from a year earlier, the largest annual drop since July 2014. Residential investment accounts for about 3.9 percent of the economy.
“No way is the housing market on solid ground at the moment,” said Lawrence Yun, chief economist for the National Association of Realtors.
Yun blamed the sharp increase in mortgage rates over the past year. Mortgage giant Freddie Mac, the Federal Home Loan Mortgage Corp., reported Wednesday that the rate on 30-year, fixed-rate mortgages was 4.81 percent, down from 4.94 percent a week earlier but up from 3.92 percent a year ago.
The 15-year, fixed-rate average dropped to 4.24 percent. It was 4.36 percent a week ago and 3.32 percent a year ago.
The five-year adjustable rate average fell to 4.09 percent. It was 4.14 percent a week ago and 3.22 percent a year ago.
The Federal Reserve has raised short-term rates three times this year; it’s expected to raise them again in December and three times next year. Given sluggishness in the U.S. housing market, Yun suggested that “maybe the Federal Reserve can take a little pause in their interest rate hikes.”
MEDIAN PRICE UP 3.8%
The median U.S. home price rose 3.8 percent from a year before to $255,400. The inventory of homes for sale was 1.85 million, down from September but up 2.8 percent from a year before. Low inventories have pushed prices higher and kept some buyers out of the market. Rising inventories would likely curb price increases and allow “for much more manageable, less frenzied buying conditions,” Yun said.
October sales were up in three of four U.S. regions: They rose 1.5 percent in the Northeast, 1.9 percent in the South and 2.8 percent in the West. They fell 0.8 percent in the Midwest.
The monthly increase was more pronounced in condominium and co-op units, which were up 5.3 percent to 600,000. Sales of single-family homes rose 0.9 percent.
At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, below the five-month supply mark that Realtors consider to be consistent with a tight market.
Existing-home sales account for about 90 percent of the market and are calculated when contracts close.
The remainder of the market is made up of new home sales, which are a timelier indicator because they’re tabulated when contracts are signed.
Two other housing reports this week gave a mixed picture of the sector: Sentiment among homebuilders this month dropped the most since 2014 amid pessimism over both current and future demand, while government data showed housing starts rebounding slightly in October.