Existing home sales increased in October, hitting their highest pace since earlier this summer, however, sales are still down year-over-year, according to the latest report from the National Association of Realtors.
Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2% to a seasonally adjusted annual rate of 5.48 million in October. This is down from a downwardly revised 5.37 million in September.
This increase marks the strongest pace of sales since June’s 5.51 million, however, it is still down 0.9% from last year, marking the second consecutive month of annual declines.
“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,” NAR Chief Economist Lawrence Yun 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.”
Yun explained that while Hurricanes Harvey and Irma are still creating a pull on home sales in Texas and Florida, sales should completely bounce back to their normal levels by next year.
“It has been an eventful past couple months as the housing market has absorbed and bounced back from a string of deadly and destructive storms,” Zillow Chief Economist Svenja Gudell said. “But late-summer action aside, the housing market largely remains stuck in the same, predictable rut it has been in for the past two years or so: Demand is high, inventory is low and nothing short of a dramatic shock – which nobody expects – seems likely to knock it off that track.”
The median existing home price for all housing types in October increased 5.5% from last year’s $234,100 to $247,000 in October this year. This marks the 68th straight month of year-over-year gains.
“More than two years of inventory declines have taken a toll on sales,” Redfin Chief Economist Nela Richardson said. “Buyer demand continues to surpass last year’s levels, and we don’t expect that to change anytime soon. What will change is the cost of buying a home, which is likely to increase heading into 2018.”
Another expert explained this growing level of demand continues to worsen the already low levels of housing inventory.
“Existing home sales rose for the second month in a row in October, with a larger than expected gain of 2% m/m,” Capital Economics Property Economist Matthew Pointon said. “But that rise has only worsened what was an already very low level of inventory. With home buyer sentiment dropping to a six-year low in September, there seems little chance that this marks the start of a sustained rise in sales.”
Total housing industry continues to decline, falling 3.2% to 1.8 million homes available for sale in October. This is down a full 10.4% from last year’s 2.01 million homes, and marks the 29th consecutive month of annual declines. Unsold inventory now rests at a 3.9-month supply at the current sales pace.
“We expect existing home sales to continue to edge higher over at least the next year, powered by solid job gains, faster wage increases, and improving demographics as Millennials form households at a faster pace,” Nationwide Chief Economist David Berson said. “The combination of rising housing demand and continued low inventories of homes for sale suggest that house price gains will continue to be outsized.”