Sales of existing homes, a materially more stable market than sales of newer residences, rose unexpectedly in October. Forecasts had been that this key series would have shown a modest decline for the month. However, sales ticked up, although the Northeast region did see some late-month reversals from the ravages of Hurricane Sandy.
All told, sales rose by a modest 2.1%, coming in at an annualized rate of 4.79 million homes. In September, estimated sales were 4.69 million homes. That was a slight downward revision from the initially estimated 4.75 million homes sold that month. Forecasts had been that sales in October would have totaled 4.70 million units annualized.
Lawrence Yun, the Chief Economist of the National Association of Realtors, the trade group that puts out this monthly metric, noted that "home sales continue to trend up and most October transactions were completed by the time the storm hit, but growing demand with limited inventory is pressuring home prices in much of the country.'' He went on to suggest that "we expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions.'' In all, the median existing home prices for all housing types was $178,600 in October. That was more than 11% higher than the comparable median price recorded a year earlier. Moreover, this latest gain made it eight months in a row that prices had been higher than the year before. The last time we saw such an extended uptrend was in early 2006, or just before the agonizingly long housing slump had commenced.
Moreover, total housing inventories continued to decline, falling by 1.4% in the latest month. The current supply of existing homes for sale totaled just 5.4 months. That is low by historical standards, and a bit below the six-month average, which is considered healthy. Thus, barring some exogenous shocks to the system, housing prices should continue to trend higher in the months to come.
Finally, the median time for a home on the market in October was 71 days. That is a full 26% below the average in October of 2011. Meantime, regionally, the pace of homes sold eased by 1.7% in the Northeast. Home sales inched forward in the other three regions, gaining 4.4% in the West to pace the regional increases last month. All told, this was a solid report, and one that gives us some confidence in this sector's continuing strength going forward over the next year or two.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.