Existing home sales in the United States increased again in October to the highest annual pace for almost a decade, the latest real estate index shows.
All major regions saw monthly and annual sales increases with a national rise of 2% which means that transactions in this sector are now 5.9% above a year ago, the highest since February 2007.
The data from the National Association of Realtors also shows that the median existing home price for all housing types in October was $232,200, up 6% from October 2015 and the 56th month in row of price gains
According to Lawrence Yun, NAR chief economist, the current wave of sales activity represents a convincing autumn revival for the housing market. ‘October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealised pent-up demand that held back many would-be buyers over the summer because of tight supply,’ he said.
‘Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes. The good news is that the tightening labour market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this autumn,’ he added.
The index also show that total housing inventory at the end of October fell 0.5% to 2.02 million existing homes available for sale and is now 4.3% lower than a year ago, representing the 17th month in a row when inventory has fallen. It means that unsold inventory is at a 4.3 month supply at the current sales pace, which is down from 4.4 months in September.
‘The ramp-up in housing starts in October is a hopeful sign that overall supply can steadily increase enough to provide more choices for buyers and also moderate price growth. A prolonged continuation of the robust single family starts pace seen last month would go a long way in giving homeowners much needed assurance that they can list their home for sale and find a new home to buy within a reasonable timeframe,’ Yun explained.
Properties typically stayed on the market for 41 days in October, up from 39 days in September but down considerably from a year ago when it was 57 days. Short sales were on the market the longest at a median of 99 days in October, while foreclosures sold in 50 days and non-distressed homes took 39 days and 43% of homes sold in October were on the market for less than a month.
The number of first time buyers is falling. They made up 33% of sales in October, down from 34% in September but up from and 31% a year ago. NAR president William Brown believes that the Federal Housing Administration’s low down payment mortgage option should continue to help many young and moderate income borrowers achieve home ownership.
But he thinks more could be done, for example reducing mortgage insurance premiums and eliminating ‘life of loan’ mortgage insurance. ‘These two moves would help the current home ownership rate recover from its near all-time low and give more prospective first time buyers a more affordable financing option,’ he added.
All-cash sales made up 22% of transactions in October, up from 21% in September but down from 24% a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in October, down from 14% in September and unchanged from a year ago while 61% of investors paid in cash in October.
Distressed sales, that is foreclosures and short sales, increased slightly to 5% from 4% in September but down from 6% a year ago. Overall 4% of October sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 18% below market value in October compared to 15% in September, while short sales were discounted 16% compared to 11% in September.
A breakdown of the figures shows that single family home sales increased 2.3% in October and are now 6.6% above a year ago while the median existing single family home price was $233,700 in October, up 5.9% from October 2015. The median existing condo price was $220,300 in October, some 6.2% above a year ago.
October existing home sales in the Northeast climbed 1.4% and are now 1.4% above a year ago while the median price was $255,500, up 2.9% from October 2015.
In the Midwest existing home sales grew 2.3% and are now 6.3% above a year ago with a median price of $181,500, up 5.8% from a year ago.
Existing home sales in the South in October rose 2.8% and are now 4.7% above October 2015 with a median price of $202,300, up 7.4% from a year ago.
In the West existing home sales increased 0.8% and are now 10.4% higher than a year ago with a median price of $345,800, up 7.8% from October 2015.
