Existing-home sales rose in October for the second straight month and are now above year-over-year levels for the first time in a year, according to the National Association of Realtors.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.5% to a seasonally adjusted annual rate of 5.26 million in October from an upwardly-revised 5.18 million in September.
Wednesday, the Census Bureau reported that new home starts dropped 2.8% in October.
Sales are at their highest annual pace since September 2013 (also 5.26 million) and are now above year-over-year levels (2.5% from last October) for the first time since last October.
Lawrence Yun, NAR chief economist, says the housing market this year has been a tale of two halves.
“Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth,” he said. “Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year-over-year sales increases,” Yun said.
The median existing-home price for all housing types in October was $208,300, which is 5.5% above October 2013. This marks the 32nd consecutive month of year-over-year price gains.
“Home resales saw an unexpected rise in October. The current growth in home sales along with the jump in housing starts indicates that the housing market isn’t freezing over quite yet,” said Quicken Loans vice president Bill Banfield. “Home prices making slow increases, hand-in-hand with interest rates at generational lows, leads to an excellent opportunity to buy a home.”
Total housing inventory at the end of October fell 2.6% to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace – the lowest since March (also 5.1 months). Unsold inventory is now 5.2% higher than a year ago, when there were 2.11 million existing homes available for sale.
“The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory,” Yun said. “However, more housing starts are needed to increase supply, meet current demand and keep price growth in check.”
All-cash sales were 27% of transactions in October, up from 24% in September but down from 31% in October of last year. Individual investors, who account for many cash sales, purchased 15% of homes in October, up from 14% last month but below October 2013 (19%). Sixty-five percent of investors paid cash in October.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in October dropped to 4.03%, its lowest level since June 2013 (4.07%), and down from 4.16% in September.
The percent share of first-time buyers in October remained at 29% for the fourth consecutive month; first-time buyers have represented less than 30% of all buyers in 18 of the past 19 months. A separate NAR survey released earlier this month revealed that the annual share of first-time buyers fell to its lowest level in nearly three decades.
Distressed homes – foreclosures and short sales – were in the single-digits for the third month this year, decreasing to 9% in October from 10% in September; they were 14% a year ago. Seven percent of October sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 15% below market value in October (14% in September), while short sales were discounted 10% (14% in September).
“Although distressed sales are trending downward, there are still areas (such as judicial states Florida, Maryland and New York) plagued by foreclosures, and homeowners faced with the awful choice between a tax bill they are unable to pay and losing their home,” says NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “Realtors urge the U.S. House to schedule a vote on “The Mortgage Forgiveness Tax Relief Act,” as soon as possible.
This bipartisan legislation would extend an expired provision that has helped millions of distressed American families by allowing tax relief when lenders forgive a portion of the mortgage debt they owe.”
Properties typically stayed on the market in October longer (63 days) than last month (56 days) and a year ago (54 days). Short sales were on the market for a median of 150 days in October, while foreclosures sold in 68 days and non-distressed homes took 61 days. Thirty-three percent of homes sold in October were on the market for less than a month.
Single-family home sales increased 1.3% to a seasonally adjusted annual rate of 4.63 million in October from 4.57 million in September, and are now 2.9% above the 4.50 million pace a year ago. The median existing single-family home price was $208,700 in October, up 5.6% from October 2013.
Existing condominium and co-op sales increased 3.3% to a seasonally adjusted annual rate of 630,000 units in October from 610,000 in September, unchanged from the 630,000 unit pace a year ago. The median existing condo price was $205,400 in October, which is 4.5% higher than a year ago.
Regionally, October existing-home sales in the Northeast climbed 2.9% to an annual rate of 710,000, and are 4.4% above a year ago. The median price in the Northeast was $246,900, which is 1.2% above a year ago.
In the Midwest, existing-home sales jumped 5.1% to an annual level of 1.24 million in October, and are 2.5% higher than October 2013. The median price in the Midwest was $164,100, up 6.8% from a year ago.
Existing-home sales in the South increased 2.8% to an annual rate of 2.17 million in October, and are now 5.3% above October 2013. The median price in the South was $178,000, up 5.1% from a year ago.
Existing-home sales in the West declined 5.0% to an annual rate of 1.14 million in October, and remain 3.4% below a year ago. The median price in the West was $296,800, which is 5.0% above October 2013.