October Existing Home Sales Post 1.9% Increase

Existing home sales rose in October, a slight recovery from the declines seen in September, the National Association of Realtors reported yesterday.

NAR said total existing home increased by 1.9% from September to a seasonally adjusted annual rate of 5.46 million. It said despite lingering regional variances, overall sales improved by 4.6% from a year ago (5.22 million).

The report said single-family home sales rose to a seasonally adjusted annual rate of 4.87 million in October from 4.77 million in September and improved by 5.4% from a year ago. The median existing single-family home price rose to $273,600 in October, up 6.2% from a year ago. Existing condominium and co-op sales held steady at 590,000 units in October and fell by 1.7% from a year ago. The median existing condo price rose to $248,500 in October, an increase of 5.6% from a year ago.

Regionally, October sales increased in the Midwest and South, but sales rose in all regions from a year ago. Median home prices in all regions increased from one year ago, with the West region showing the strongest price gain.

Sales in the Northeast fell by 1.4% to an annual rate of 690,000, with no change from a year ago. The median price in the Northeast rose to $296,700, up 5.7% from a year ago. In the Midwest, sales increased by 1.6% to an annual rate of 1.29 million and improved by 2.4% from a year ago. The median price in the Midwest rose to $209,900, a 6.7% jump from a year ago.

Sales in the South increased by 4.4% to an annual rate of 2.35 million in October and rose by 7.8% from a year ago. The median price in the South rose to $234,900, a 6.0% increase from this time last year. Sales in the West declined by 0.9% to an annual rate of 1.13 million in October, but improved by 3.7% from a year ago. The median price in the West rose to $410,700, up 7.8% from a year ago.

NAR said the median existing home price for all housing types in October rose to $270,900, up 6.2% from a year ago ($255,100), as prices rose in all regions. October’s price increase marks 92 straight months of year-over-year gains. Total housing inventory at the end of October sat at 1.77 million units, down 2.7% from September and 4.3% from one year ago (1.85 million). Unsold inventory sits at a 3.9-month supply at the current sales pace, down from 4.1 months in September and from the 4.3-month figure a year ago.

“Lower mortgage rates continue to boost sales, which are up 4.6% over the year,” said Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “Inventories are shrinking once again, however, exerting some upward pressure on home prices.”

Vitner said the housing market “continues to move in the right direction,” thanks to lower mortgage rates. “While the recent improvement in resales is encouraging, the gains over the past few months represent a reversal of last year’s higher mortgage rate-induced slide,” he said. “Furthermore, the recent improvement likely reflects a return to the slow and steady upward trajectory which has become a hallmark of this expansion. The gradual climb is partially explained by the reluctance of older generations to move from their current home, a trend which has slowed turnover and significantly reduced the inventory of homes on the market.”

NAR Chief Economist Lawrence Yun said October’s sales increase is “encouraging” and he expects added growth in the coming months. “Historically-low interest rates, continuing job expansion, higher weekly earnings and low mortgage rates are undoubtedly contributing to these higher numbers,” he said. “We will likely continue to see sales climb as long as potential buyers are presented with an adequate supply of inventory.”

NAR said properties typically remained on the market for 36 days in October, up from 32 days in September and consistent with October 2018 numbers. Forty-six percent of homes sold in October 2019 were on the market for less than a month.

First-time buyers were responsible for 31% of sales in October, down from 33% in September and identical to the 31% recorded a year ago. Individual investors or second-home buyers purchased 14% of homes in October, unchanged from September but down from the 15% figure recorded a year ago. All-cash sales accounted for 19% of transactions in October, up from 17% in August but down from 23% a year ago.

The report said distressed sales represented 2% of sales in October, unchanged from September but down from 3% a year ago.