A tidal wave of existing-home sales flooded the housing market last month, pooling to a decade-high pace, according to the National Association of REALTORS® (NAR). Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 2.0 percent 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 was 5.9 percent above a year ago (5.29 million) and surpasses June’s pace (5.57 million) as the highest since February 2007 (5.79 million).
“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,” says Lawrence Yun, chief economist at NAR. “Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes.
“The good news,” adds Yun, “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 percent 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 percent to 2.02 million existing homes available for sale, and is now 4.3 percent 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,” says 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 timeframe.”
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 percent 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 percent from 3.46 percent in September. The average commitment rate for all of 2015 was 3.85 percent.
“As a result of the anticipated economic stimulus in early 2017, mortgage rates post-election have now surged to around 4 percent as investors expect a strengthening economy and higher inflation,” says 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 percent of sales in October, which is down from 34 percent in September but up from and 31 percent 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 percent (32 percent in 2015), which is the highest since 2013 (38 percent).
All-cash sales were 22 percent of transactions in October, up from 21 percent in September but down from 24 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in October, down from 14 percent in September and unchanged from a year ago. Sixty-one percent of investors paid in cash in October.
Distressed sales—foreclosures and short sales—inched forward to 5 percent in October, up from 4 percent in September but down from 6 percent a year ago. Four percent of October sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in October (15 percent in September), while short sales were discounted 16 percent (11 percent 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., at 35 days; San Jose-Sunnyvale-Santa Clara, Calif., at 37 days; Seattle-Tacoma-Bellevue, Wash., at 42 days; Nashville-Davidson-Murfreesboro-Franklin, Tenn., at 43 days; and Denver-Aurora-Lakewood, Colo., at 44 days.
Single-Family and Condo/Co-Op Sales
Single-family home sales increased 2.3 percent to a seasonally adjusted annual rate of 4.99 million in October from 4.88 million in September, and are now 6.6 percent above the 4.68 million pace a year ago. The median existing single-family home price was $233,700 in October, up 5.9 percent 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 percent above a year ago.
Regional Breakdown
October existing-home sales in the Northeast climbed 1.4 percent to an annual rate of 750,000, and are now 1.4 percent above a year ago. The median price in the Northeast was $255,500, which is 2.9 percent above October 2015.
In the Midwest, existing-home sales grew 2.3 percent to an annual rate of 1.36 million in October, and are now 6.3 percent above a year ago. The median price in the Midwest was $181,500, up 5.8 percent from a year ago.
Existing-home sales in the South in October rose 2.8 percent to an annual rate of 2.22 million, and are now 4.7 percent above October 2015. The median price in the South was $202,300, up 7.4 percent from a year ago.
Existing-home sales in the West increased 0.8 percent to an annual rate of 1.27 million in October, and are now 10.4 percent higher than a year ago. The median price in the West was $345,800, up 7.8 percent from October 2015.
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