Existing-home sales increased in October to their strongest pace since earlier this summer, but continual supply shortages led to fewer closings on an annual basis for the second straight month, according to the National Association of Realtors.
Total existing sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2 percent to a seasonally adjusted annual rate of 5.48 million in October from a downwardly revised 5.37 million in September. After last month’s increase, sales are at their strongest pace since June (5.51 million), but still remain 0.9 percent below a year ago.
Lawrence Yun, NAR chief economist, said sales activity in October picked up for the second straight month, with increases in all four major regions.
“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,” he said. “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 residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida," he added. "However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”
The median existing-home price for all housing types in October was $247,000, up 5.5 percent from October 2016 ($234,100). October’s price increase marks the 68th straight month of year-over-year gains.
Total housing inventory at the end of October decreased 3.2 percent to 1.80 million existing homes available for sale, and is now 10.4 percent lower than a year ago (2.01 million) and has fallen year-over-year for 29 consecutive months. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago.
Properties typically stayed on the market for 34 days in October, which is unchanged from last month and down from 41 days a year ago. Forty-seven percent of homes sold in October were on the market for less than a month.
Realtor.com’s Market Hotness Index, measuring time on the market data and listings views per property, revealed that the hottest metro areas in October were San Jose-Sunnyvale-Santa Clara, California; Vallejo-Fairfield, California; San Francisco-Oakland-Hayward, California; San Diego-Carlsbad, California; and Boston-Cambridge-Newton, Massachusetts.
“Listings — especially those in the affordable price range — continue to go under contract typically a week faster than a year ago, and even quicker in many areas where healthy job markets are driving sustained demand for buying,” said Yun. “With the seasonal decline in inventory beginning to occur in most markets, prospective buyers will likely continue to see competitive conditions through the winter.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.90 percent in October (matches highest rate since June) from 3.81 percent in September. The average commitment rate for all of 2016 was 3.65 percent.
First-time buyers were 32 percent of sales in October, which is up from 29 percent in September but down from 33 percent a year ago. NAR’s 2017 Profile of Home Buyers and Sellers, released last month, revealed that the annual share of first-time buyers was 34 percent.
NAR President Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri, and CEO of RE/MAX Boone Realty, said the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the U.S.
“Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said Mendenhall. “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.”
All-cash sales were 20 percent of transactions in October, unchanged from September and down from 22 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in October, down from 15 percent last month and unchanged from a year ago.
Distressed sales — foreclosures and short sales — were 4 percent of sales in October, unchanged from last month and down from 5 percent year ago. Three percent of October sales were foreclosures and 1 percent were short sales.
Single-family and Condo/Co-op Sales
Single-family home sales climbed 2.1 percent to a seasonally adjusted annual rate of 4.87 million in October from 4.77 million in September, but are still 1 percent under the 4.92 million pace a year ago. The median existing single-family home price was $248,300 in October, up 5.4 percent from October 2016.
Existing condominium and co-op sales increased 1.7 percent to a seasonally adjusted annual rate of 610,000 units in October (unchanged from a year ago). The median existing condo price was $236,800 in October, which is 6.9 percent above a year ago.
This article was contributed to The Log by the National Association of Realtors.