Existing Home Sales Continue Their Rise In October

Existing home sales were up 0.8% in October from September to a seasonally adjusted annual rate of 6.34 million, but down 5.8% from October a year earlier when the annual rate was 6.73 million, according to the National Association of Realtors.

The October to September increase was the second monthly hike in a row.

Total housing inventory of 1.25 million units in October represented a 0.8% decline from September and a 12% drop from October 2020 when it was at 1.42 million.

Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September’s supply, and down from 2.5 months in October 2020.

“Home sales remain resilient, despite low inventory and increasing affordability challenges,” said Lawrence Yun, NAR’s chief economist. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”

At the same time, prices in the housing market continue their upward trajectory with the median price up 13.1% year-over-year in October to $353,900 on average for all types of housing around the country. The increase occurred for the 116th straight year-over-year time which the trade group said was the longest-running streak on record.

Yun said it is likely the pandemic contributed to the sales and price movements upwards. “Among some of the workforce, there is an ongoing trend of flexibility to work anywhere, and this has contributed to an increase in sales in some parts of the country,” he said.

He also pointed out that record-high stock markets and all-time high home prices have worked to significantly raise total consumer wealth and, when coupled with extended remote work flexibility, elevated housing demand in vacation regions.

The time homes were typically on the market in October changed little from September (18 days versus 17 days). In October 2020, the figure was 21 days.

The share of first-time homebuyers showed the same pattern: a slight increase (29% versus 28%) and a decline from October a year earlier which was at 32%.

NAR spotlighted the lack of inventory from the dearth of new construction in a June study.

In its sponsored report, “Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing,” the organization notes that housing construction has fallen far from its traditional pace: “While the total stock of US housing grew at an average annual rate of 1.7% from 1968 through 2000, the US housing stock grew by an annual average rate of 1% in the last two decades, and only 0.7% in the last decade.”

As home construction has lagged, the population has grown, albeit at a significantly slowing pace since 2015, when the year-over-year expansion was 0.74%, according to the most recent national population estimates by the Census Bureau. In 2019, the rate was down to 0.46% and, in 2020, 0.35%.