Strong Sales

Existing home sales strengthen in October

The pace of existing home sales was up from the previous month in October, according to the National Association of Realtors. However, the organization said continuing shortages of listed homes resulted in slower sales compared to the previous year.

Sales of existing single-family homes, condominiums, co-ops, and townhouses stood at a seasonally adjusted annual rate of 5.48 million in October. This marked a 2 percent increase from September's downwardly revised pace of 5.37 million. While the sales rate was at its strongest point since the June figure of 5.51 million, it was also down 0.9 percent from October 2016, marking the second consecutive yearover-year decrease.

"Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which is in turn giving households added assurance that now is a good time to buy a home," said Lawrence Yun, chief economist at the National Association of Realtors. "While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated."

The inventory of homes available for sale was down sharply from the previous year, falling 10.4 percent to 1.8 million. This was also down 3.2 percent from September. October was the 29th consecutive month with a year-over-year decrease in inventory.

The shrinking availability of homes for sale has helped to fuel increases to median home prices. The typical home sold in October was purchased for $247,000, an annual bump of 5.5 percent. Median prices have gone up from the previous year for 68 straight months.

Single-family homes had a median price of $248,300 in October, a year-over-year increase of 5.4 percent. The seasonally adjusted annual sales rate for this type of property stood at 4.77 million, a 2.1 percent increase from the previous month but a 1 percent decrease from the previous year.

The median condominium or co-op sold for $235,800, up 6.9 percent from October 2016. The seasonally adjusted annual sales rate for these properties stood at 610,000, unchanged from the previous year but up 1.7 percent from September.

Available homes continued to sell quickly, with the typical existing property selling 34 days after it was listed. This was unchanged from September, but one week faster than October 2016. Forty-seven percent of

existing homes were on the market for less than a month before finding a buyer.

Yun said properties in the affordable price range are quickly snapped up. Sales typically occur even faster in areas with healthy job markets, which create a sustained demand for buyers.

“With the seasonal decline in inventory beginning to occur in most markets, prospective buyers will likely continue to see competitive conditions through the winter,” said Yun.

First-time buyers accounted for 32 percent of October’s existing sales, jumping 3 percentage points from September. However, this remained below the share of 33 percent in October 2016 and the annual share of 34 percent identified in the National Association of Realtors’ 2017 Buyer and Seller Profile report, which was released last month.

Investor activity remained fairly tepid, with individual investors accounting for 13 percent of the month’s sales. This was unchanged from the previous year and down from 15 percent in September. These buyers typically account for many of the month’s all-cash transactions, which fell from 22 percent in October 2016 to 20 percent.

Four percent of existing home sales in October were distressed properties, including 3 percent that were foreclosures and 1 percent that were short sales. This share was unchanged from the previous month and down from 5 percent in October 2016.

Mortgage rates increased slightly in October, with Freddie Mac reporting that the average commitment rate for a 30-year fixed rate conventional mortgage went from 3.81 percent in September to 3.9 percent. In 2016, the average commitment rate for this type of mortgage was 3.65 percent.

Each of the four geographical regions in the United States identified by the National Association of Realtors saw existing sales grow from the previous month, although some regions had an annual decrease. In the Northeast, the annual sales rate of 740,000 was unchanged from the previous year but up 4.2 percent from September. The median price in this region was $272,800, a yearover-year increase of 6.6 percent.

The annual rate of 2.16 million existing home sales in the South was up 1.9 percent from September, but 1.8 percent lower than October 2016. Yun said the effects of Hurricane Harvey on Texas and Hurricane Irma on Florida helped dampen sales, but that he expects the trend of strong demand in the region to continue. The median price on an existing home sold in the South in October was $214,900, up 4.6 percent from the previous year.

In the Midwest, the annual rate of existing home sales was up 0.8 percent from September and 1.5 percent from October 2016 to 1.27 million. A home in this region sold for a median price of $194,700, a yearover-year increase of 7.1 percent.

The West had an annual sales rate of 1.27 million, up 2.4 percent from the previous month and 0.8 percent from the previous year. The median price of an existing home grew 7.8 percent from the previous year to $375,100.