Sales of existing homes improved in October while inventories declined according to the National Association of Realtors® monthly report. Total sales increased 1.4 percent to a seasonally adjusted annual rate of 4.97 million in October from a downwardly revised (from 4.91 million) 4.90 million units in September. October sales were 13.5 percent higher than the 4.38 million annual rate one year earlier. Existing home sales include completed transactions on single-family, townhomes, condominiums, and cooperative apartments.
Single family sales rose from an annual rate of 4,310,000 in September to 4,380,000, an increase of 1.6 percent. Condo and coop sales were unchanged at 590,000. Single-family homes sales were up 13.8 percent on an annual basis and condo sales increased by 10.5 percent. Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 590,000 in October but are 10.5 percent above the 534,000-unit level in October 2010.
Even more positive was the continuing decline in inventory. There were 3.33 million existing homes available for sale at the end of October, an 8.0 month supply at the current sales pace. This is a 2.2 percent decline from the number of homes for sale last month when the inventory stood at 8.3 months. Inventories have been gradually trending lower since setting a record of 4.58 million in July 2008.
The national median existing-home price for all housing types was $162,500 in October, which is 4.7 percent below October 2010 and the median existing single-family home price was $161,600, 5.8 percent below October 2010 and the condo price was $160,300 down 1.5 percent on an annual basis.
Distressed homes typically sold at deep discounts but the share of foreclosures and short sales slipped to 28 percent of sales in October from 30 percent in September. REO made up 17 percent of sales and 11 percent were short sales. Distressed homes held a 34 percent market share in October 2010.
Lawrence Yun, NAR Chief Economist said, "In some areas we're hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties. Realtors in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers."
First-time buyers accounted for 34 percent of transactions in October compared to 32 percent both in September and a year ago. Investors purchased 18 percent of homes, down slightly from the 19 percent posted in both September 2011 and October 2010. Twenty-nine percent of purchases were all cash, virtually unchanged month-over-month and year-over-year. Investors make up the bulk of cash transactions.
Contract failures were again an issue. Cancellations caused by declined mortgage applications, underwriting problems due to appraised values, and other problems including inspection issues and job loses jumped to 33 percent in October from 18 percent in September and 8 percent a year ago. Yun said this was one factor holding back higher sales. "Other recent factors include disruption in the National Flood Insurance Program and lower loan limits for conventional mortgages, which paradoxically force some of the most creditworthy consumers to pay unnecessarily higher interest rates," Yun said.
In the Northeast region existing home sales were down 5.1 percent to an annual rate of 750,000 but were 1.4 percent above October 2010. The median price in the region was $224,400, down 5.5 percent from last year.
Existing-home sales in the Midwest rose 2.8 percent in October to a pace of 1.10 million and are 19.6 percent higher than October 2010. The median price in the Midwest was $132,800, which is 4.7 percent below a year ago.
Sales in the South increased 2.1 percent to an annual level of 1.94 million in October and are 14.1 percent above a year ago while the median price dipped 1.6 percent to $145,700.
In the West the pace of sales rose 4.4 percent to 1.19 million. This is 15.5 percent higher than in October 2010. The median price was $207,500, down 1.6 percent on an annual basis.
