October Existing Home Sales Stay Strong
Existing home sales continued to trend upward in October, marking five consecutive months of month-over-month gains, the National Association of Realtors reported yesterday.
Total existing-home sales (https://www.nar.realtor/existing-home-sales) increased by 4.3% from September to a seasonally adjusted annual rate of 6.85 million in October. Year over year, sales jumped by 26.6% from a year ago (5.41 million).
Single-family home sales rose to a seasonally adjusted annual rate of 6.12 million in October, up 4.1% from 5.88 million in September and up 26.7% from one year ago. The median existing single-family home price was $317,700 in October, up 16% from a year ago. Existing condominium and co-op sales rose to a seasonally-adjusted annual rate of 730,000 units in October, up 5.8% from September and up 25.9% from one year ago. The median existing condo price rose to $273,600 in October, an increase of 10.3% from a year ago.
All four major regions posted double-digit month-over-month and year-over-year growth. In the Northeast, sales rose by 4.7% to an annual rate of 900,000 and increased by 30.4% from a year ago. The median price in the Northeast jumped to $356,500, up 20.2% from a year ago. Sales jumped by 8.6% in the Midwest to an annual rate of 1,640,000 in October and improved by 28.1% from a year ago. The median price in the Midwest rose $243,500, a 16.7% increase from a year ago.
Sales in the South increased by 3.2% to an annual rate of 2.91 million in October and improved by 26.5% from a year ago. The median price in the South rose $272,500, a 15.7% increase from a year ago. Sales in the West rose by 1.4% to an annual rate of 1,400,000 in October and improved by 22.8% increase from a year ago. The median price in the West jumped to $467,800, up 15.1% from a year ago.
“October existing-home sales increased for the fifth consecutive month, reinforcing the remarkable strength in the housing market seen this year,” said Joel Kan Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “The housing market has only strengthened since the pandemic-induced lows in the spring. MBA’s mortgage application data show similar trends, with early signs that the increase in sales will continue. Purchase applications have now increased year-over-year for more than six months.”
However, Kan noted an ongoing hurdle for many prospective buyers is that housing inventory is shrinking. “The 2.5-month supply is a record low, and continues to push home prices higher,” he said. “This poses challenges for many potential first-time buyers and lower-income buyers.”
And Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said the current “robust pace” of existing home sales will be difficult to sustain, amid low inventories and fast-rising home prices.
“While we expect this strong pace of sales to continue, the pace of improvement may soon slow,” Vitner said. “Pending home sales, which lead existing sales by a month or two, fell 2.2% in September. Similarly, mortgage purchase applications have started to come back down from the lofty heights reached this summer.”
NAR Chief Economist Lawrence Yun said the five-month surge in existing home sales has now offset spring market losses. “Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” he said. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.”
The report said the median existing home price for all housing types in October jumped to $313,000, up 15.5% from a year ago ($271,100), marking 104 straight months of year-over-year gains. Total housing inventory at the end of October totaled 1.42 million units, down 2.7% from September and down 19.8% from one year ago (1.77 million). Unsold inventory sits at record-low 2.5-month supply at the current sales pace, down from 2.7 months in September and down from the 3.9-month figure a year ago.
Other report findings:
–Properties typically remained on the market for 21 days in October, unchanged from September and down from 36 days in October 2019. Seventy-two percent of homes sold in October were on the market for less than a month.
–First-time buyers represented 32% of sales in October, up from the 31% in both September and a year ago.
–Individual investors or second-home buyers purchased 14% of homes in October, a small increase from 12% in September and unchanged from a year ago. All-cash sales accounted for 19% of transactions in October, up from 18% in September but unchanged from October 2019.
Distressed sales – foreclosures and short sales – represented less than 1% of sales in October, equal to September’s percentage but down from 2% a year ago.