Pending sales in the US bounced back in October but still down on an annual basis
Pending home sales in the United States rebounded strongly in October following three straight months of falling activity, but are still down year on year, the latest index shows.
All major regions except for the West saw an increase in contract signings with the pending home sales index from the National Association of Realtors up 3.5% in October to its highest reading since June but it is still 0.6% below a year ago.
Pending sales in October were primarily driven higher by a big jump in the South, which saw a bounce back after hurricane related disruptions in September, according to Lawrence Yun, NAR chief economist.
But he pointed out that October’s solid increase in contract signings was still not enough to keep activity from declining on an annual basis for the sixth time in seven months. ‘Buyers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market,’ he said.
According to Yun, the supply and affordability headwinds seen most of the year have not abated this fall. Although home builders are doing their best to ramp up production of single family homes amidst ongoing labour and cost challenges, overall activity still drastically lags demand. F
Further exacerbating the inventory scarcity is the fact that home owners are staying in their homes longer. NAR’s 2017 profile of home buyers and sellers revealed that owners typically stayed in their home for 10 years before selling, an all-time high. Prior to 2009, sellers consistently lived in their home for a median of six years before selling.
‘Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999. Until new home construction climbs even higher and more investors and home owners put their home on the market, sales will continue to severely trail underlying demand,’ Yun added.
With two months of data remaining for the year, Yun forecasts for existing home sales to finish at around 5.52 million, which is an increase of 1.3% from 2016 and the national median existing-home price this year is expected to increase around 6%. In 2016, existing sales increased 3.8% and prices rose 5.1%.
A breakdown of the index figures shows that sales in the Northeast inched up 0.5% in October but are still 1.9% below a year ago. In the Midwest sales increased 2.8% but are 0.9% lower than October 2016.
Pending home sales in the South jumped 7.4% and are now 2% higher than October 2016 while in the West sales decreased 0.7% and are now 4.4% below a year ago.