Existing home sales continued a gradual recovery in October after a summer of sliding sales. For the second straight month the National Association of Realtors® (NAR) is reporting that sales of previously owned homes increased, this time by 2.0 percent. Single-family houses, townhouses, condos, and townhouses sold at a seasonally adjusted annual rate of 5.48 million. The increase brought sales back to their strongest pace since June's rate of 5.51 million, but they are still running behind sales in October 2016 by 0.9 percent.
September's sales had been reported as up 0.7 percent from August, to 5.390 million, ending a three-month streak of losses. That gain has now been revised down to 5.37 million.
Analysts had been looking for October sales in an annual range of 5.320 to 5.560 million. The consensus of those polled by Econoday was 5.440.
Single-family home sales climbed 2.1 percent to a seasonally adjusted annual rate of 4.87 million from 4.77 million in September, but they are still running 1.0 percent behind the 2016 pace. Existing condominium and co-op sales strengthened by 1.7 percent to a seasonally adjusted annual rate of 610,000 units, unchanged from a year earlier.
Lawrence Yun, NAR chief economist, says sales activity in October picked up for the second straight month, with increases in all four of the 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."
Added Yun, "The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida. 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 price of an existing home sold during the month was $247,000, 5.5 percent higher than in October of 2016 and the 68th straight month of annual gains. The median existing single-family home price was $248,300 and the median condo price was $236,800. These were annual increases of 5.4 percent and 6.9 percent respectively.
Inventory continues to be a problem. The total supply decreased 3.2 percent to 1.80 million existing homes at the end of October, and is now 10.4 percent lower than a year ago. The supply of homes for sale has fallen year-over-year for 29 consecutive months. The current number of listings is estimated at a 3.9-month supply given the October sales pace, down from 4.4 months a year ago.
Properties typically stayed on the market for 34 days in October, 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.
"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."
The share of first-time buyers rose from 29 percent in September to 32 percent, 1 percentage point lower than their participation a year ago. Individual (as opposed to institutional) investors purchased 13 percent of home sales compared to 15 percent in September but unchanged from the prior October. Twenty percent of transactions were all-cash and 4 percent of sales during the month were of distressed properties, down 1 point from last year.
NAR President Elizabeth Mendenhall criticizes the pending tax reform legislation in both the House and Senate as a direct attack on homeowners and homeownership. "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," she says. "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
Existing-home sales in the Northeast rose 4.2 percent to an annual rate of 740,000 in October but were unchanged from a year ago. The median home price was $272,800, annual appreciation of 6.6 percent.
In the Midwest, sales inched forward 0.8 percent to an annual rate of 1.31 million, but remain 1.5 percent below a year ago. The median price was $194,700, up 7.1 percent.
Existing-home sales in the South rose 1.9 percent to an annual rate of 2.16 million, down 1.8 percent year-over-year. The median price gained 4.6 percent to $214,900.
The pace of annual sales in the West, 1.27 million units, represented a 2.4 percent increase from September and 0.8 percent from the previous October. Median prices rose 7.8 percent to $375,100.
NAR bases its existing home sales data on transaction closings from Multiple Listing Services.