Thanks to Hurricane Sandy’s impact on the East Coast and the increase in home prices due to a lack of inventory supply, October saw an increase in existing-home sales.
October existing-home sales rose 2.1% to a seasonally adjusted annual rate of 4.79 million, compared to 4.69 million in September. Also, existing-home sales are 10.9% above the 4.32 million-units from last year, according to the National Association of Realtors.
Overall, the national median existing-home price was $176,800 in October, an 11.1% increase from a year ago, which marks the eighth consecutive month of year-over-year increases.
“Home sales continue to trend up and most October transactions were completed by the time the storm hit, but the growing demand with limited inventory is pressuring home prices in much of the country,” said Lawrence Yun, chief economist with NAR. “We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions.”
Distressed homes, including foreclosures and short sales, represented 24% of all October sales, unchanged from September and down 28% from last year.
Foreclosures generally sold at a 20% discount while short sales sold 14% under market value in October.
The country’s total existing inventory fell 1.4% in October to 2.14 million homes, which reflects a 5.4-month supply. This is down 5.6 months from September, which is the lowest housing supply since 2006. Today’s inventory level is 21.9% below year ago levels when the nation carried a 7.6-month supply.
“Even with rising home prices, we’ll continue to see favorable housing affordability conditions over the coming year, but they won’t last forever,” said Gary Thomas, president of NAR. “Inflationary pressures are expected to build during the next two years.”
He added, “As a result, mortgage interest rates will also rise with inflation. Buyers who are currently held back by tight mortgage credit standards should work to improve their credit scores so they’ll be able to qualify for a mortgage while conditions are still favorable.”
Homes continue to spend less time on the market, with the median listing now running 71 days, down from 96 days in October of 2011.
“Our view is that housing is in a recovery phase, but one that will be restrained by the availability of credit, the pace of improvement in labor market conditions, and the overhang from distressed and foreclosed properties,” said analysts at Barclays Capital.