Existing-home sales in October rose for the second straight month and eclipsed June’s cyclical sales peak to become the highest annualized pace in nearly a decade, the National Association of Realtors reported Tuesday. All major regions saw monthly and annual sales increases in October.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 2.0% to a seasonally adjusted annual rate of 5.60 million in October from an upwardly revised 5.49 million in September. October’s sales pace is 5.9% above a year ago (5.29 million) and surpasses June’s pace (5.57 million) as the highest since February 2007 (5.79 million).
Single-family home sales increased 2.3% to a seasonally adjusted annual rate of 4.99 million in October from 4.88 million in September, and are now 6.6% above the 4.68 million pace a year ago. The median existing single-family home price was $233,700 in October, up 5.9% from October 2015.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 610,000 units in October (unchanged from September and a year ago). The median existing condo price was $220,300 in October, which is 6.2% above a year ago.
October existing-home sales in the Northeast climbed 1.4% to an annual rate of 750,000, and are now 1.4% above a year ago. The median price in the Northeast was $255,500, which is 2.9% above October 2015. In the Midwest, existing-home sales grew 2.3% to an annual rate of 1.36 million in October, and are now 6.3% above a year ago. The median price in the Midwest was $181,500, up 5.8% from a year ago. Existing-home sales in the South in October rose 2.8% to an annual rate of 2.22 million, and are now 4.7% above October 2015. The median price in the South was $202,300, up 7.4% from a year ago. Existing-home sales in the West increased 0.8% to an annual rate of 1.27 million in October, and are now 10.4% higher than a year ago. The median price in the West was $345,800, up 7.8% from October 2015.
Lawrence Yun, NAR chief economist, says the wave of sales activity the last two months 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 unrealized 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.”
Added Yun, “The good news is that the tightening labor 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 fall.”
The median existing-home price for all housing types in October was $232,200, up 6.0% from October 2015 ($219,100). October’s price increase marks the 56th consecutive month of year-over-year gains.
Total housing inventory at the end of October declined 0.5% to 2.02 million existing homes available for sale, and is now 4.3% lower than a year ago (2.11 million) and has fallen year-over-year for 17 straight months. 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,” said Yun. “A prolonged continuation of the robust single-family starts pace seen last month (869,000) 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 time frame.”
Properties typically stayed on the market for 41 days in October, up from 39 days in September but down considerably from a year ago (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. Forty-three% of homes sold in October were on the market for less than a month.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched up in October for the second straight month, rising to 3.47% from 3.46% in September. The average commitment rate for all of 2015 was 3.85%.
“As a result of the anticipated economic stimulus in early 2017, mortgage rates post-election have now surged to around 4% as investors expect a strengthening economy and higher inflation,” said Yun. “In the short-term, some prospective buyers may rush to lock in their rate and buy now, while others – especially those in higher-priced markets – may be forced to delay as a larger monthly payment outstretches their budget.”
First-time buyers were 33% of sales in October, which is down from 34% in September but up from and 31% a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released last month – revealed that the annual share of first-time buyers was 35% (32% in 2015), which is the highest since 2013 (38%).
On the subject of first-time buyers, NAR President William E. Brown, a Realtor® from Alamo, California, says the Federal Housing Administration’s low-down-payment mortgage option helps many young and moderate income borrowers achieve home ownership. FHA’s just released actuarial report shows the Mutual Mortgage Insurance Fund is on consistently solid financial footing, and FHA should take responsible steps to continue managing their risk while also addressing the high premiums and lifetime insurance requirements that often times dissuade would-be buyers from considering a FHA mortgage.
All-cash sales were 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. Sixty-one% of investors paid in cash in October.
Distressed sales – foreclosures and short sales – inched forward to 5% in October, up from 4% in September but down from 6% a year ago. Four% of October sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 18% below market value in October (15% in September), while short sales were discounted 16% (11% in September).
Inventory data from Realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in October were San Francisco-Oakland-Hayward, Calif., 35 days; San Jose-Sunnyvale-Santa Clara, Calif., 37 days; Seattle-Tacoma-Bellevue, Wash., 42 days; Nashville-Davidson-Murfreesboro-Franklin, Tenn., 43 days; and Denver-Aurora-Lakewood, Colo., at 44 days.
