The numbers: Sales up by nearly 1%
Existing-home sales moved higher in October despite expectations they would do the opposite, underscoring the strong demand for housing across the country.
Existing-home sales increased 0.8% between September and October, hitting a seasonally-adjusted, annual rate of 6.34 million, the National Association of Realtors said Monday. Compared to a year ago, sales were down 5.8%.
“Home sales remain resilient, despite low inventory and increasing affordability challenges,” Lawrence Yun, chief economist at the National Association of Realtors, said in the report. “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.”
Economists polled by MarketWatch had projected existing-home sales to come in at 6.2 million.
On a regional basis, existing home sales only rose in the South and the Midwest. Meanwhile, the number of homes sold declined in the Northeast on a monthly basis, and remained flat in the West.
The median price for an existing home sold in October was $353,900, up more than 13% from a year ago. Unsold inventory was at a 2.4-month supply, equal to the previous month. A 6-month supply of homes is considered to be a sign of a balanced market.
All-cash sales represented nearly a quarter of all transactions in October, up on both a monthly and annual basis.
The big picture: A slower, but strong, housing market
The housing market has come back down to Earth after the number of homes sold soared last year. But that doesn’t mean the market is any easier to navigate for home buyers.
“One year ago marked a peak of existing home sales activity as the combination of necessity and opportunity drove many Americans to search for housing at a time of year that does not typically see a frenzied level of buyers in the market,” said Danielle Hale, chief economist at Realtor.com.
Hale noted that “activity remains notably above recent annual totals,” despite not being near its peak from last year. This is a reflection of multiple factors, including she said, the large number of Americans who are at the prime age to purchase a first home and remote-working opportunities that allow those buyers to consider a wider array of markets.
“Additionally, the sales pace could begin to pick up as still-eager buyers potentially see more newly-listed homes, with the majority of prospective sellers planning to enter the market within the next six months,” Hale added.
What they’re saying
“Sales are well-supported by low interest rates and strong job growth, but have been held back by lean listings and fading affordability,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a report.
“Low inventories and high prices have impacted affordability, and sales of both existing and new homes have come off pandemic highs. Note that inventories have been gradually rising, and the median price of existing homes has declined on a month-to-month basis over the last three months, signaling some moderation from record highs,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.
The Dow Jones Industrial Average DJIA and the S&P 500 SPX were both up slightly in Monday morning trading ahead of the report’s release, following the announcement that President Biden would nominate Jerome Powell to a second term as chairman of the Federal Reserve.