October Home Sales See an Autumn Revival!
A report last week from the National Association of Realtors revealed that October was a remarkable month for home sales. What was so special? Existing-home sales rose to a seasonally-adjusted annual rate of 5.6 million, slightly higher than the year's cyclical high point of 5.57 million in June! Even more incredible is the fact that October's numbers were the highest since February 2007. If that sounds impressive to you, you aren't alone; the NAR's chief economist, Lawrence Yun, described October's numbers as an "autumn revival" to the housing market!
What factors led to this surge in homes sales so late in the year? Yun states that “October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply."
Indeed, "widespread throughout the country" is not an understatement. Compared to September, existing-home sales rose in all four major U.S. regions in October, led by the South with a 2.8% increase. The Midwest came in a close second at 2.3%, followed by the Northeast at 1.4%. The most modest gains were in the West, where sales rose just 0.8%.
In addition to pent-up demand, the threat of rising mortgage rates may encourage potential buyers to act sooner rather than later in the coming months. November's mortgage applications rose 5.5% as interest rates reached their highest point since the beginning of the year.
However, Yun also warned that October's numbers happened "despite low inventory and prices that continue to swiftly rise above incomes.”
Additional data from the NAR report supports his statement. Nationally, the median sale price for an existing home was $232,200 in October, 6% higher than the same time last year. The highest regional prices were in the West, which likely contributed to their smaller sale rate. In that region, the median home sold for $345,800, nearly 8% higher than a year ago.
While prices keep going up, inventory continues to decline. Total inventory fell 0.5% in October to 2.02 million existing homes, 4.3% lower than a year ago. Unsold inventory now comes in at a 4.3-month supply at the current sales pace.
- Cheryl Bourland's blog
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