Sales of previously occupied U.S. homes ticked higher in October, marking their strongest annual pace since January even as competition for relatively few properties on the market pushed prices higher.
Existing homes sales rose 0.8% last month from September to a seasonally-adjusted annual rate of 6.34 million units, the National Association of Realtors said Monday. That was stronger than the 6.18 million units that economists had been expecting, according to FactSet.
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Sales fell 5.8% from October last year, when they peaked following a summer and fall surge as buyers who had held off during the early days of the pandemic jumped back into the market.
“It looks like the housing market is remaining strong, resilient and one may even say, (had) something like a mini surge, not the big one we saw last year,” said Lawrence Yun, the NAR’s chief economist.
Continued job growth, a stock market at all-time highs and rising, but still historically low mortgage rates are helping to drive home sales, Yun said.
Resilient demand continues to push the cost of a home higher. The national median home price jumped to $353,900 last month, a 13.1% increase from October last year, the NAR said.
While up overall, sales were mixed by region. Sales fell 2.6% last month in the Northeast and were flat in the West. Sales rose 4.2% in the Midwest and edged up 0.4% in the South. Each region's sales were down from October last year.
Through the first 10 months of the year, home sales are up 11% from where they were last year and are 13% higher than they were in the same stretch of 2019.
“We're easily on pace for an annual total of at least 6 million this year, which would be the best performance in 15 years,” Yun said.
Home sales have been healthy for most of this year, spurred by an ongoing desire among many people for greater space to wait out the coronavirus pandemic. Mortgage rates are also historically low, though they've begun to creep higher in recent weeks.
The average rate on the benchmark 30-year mortgage was 3.1% last week, up from 2.98% the previous week. A year ago, the rate averaged 2.72%. That upward trend is prompting some potential homeowners to act more quickly.
Homes continue to sell within days of being put up for sale. Homes typically remained on the market 18 days before getting snapped up last month. That follows a six-month streak of homes typically selling after 17 days on the market. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days. All told, 82% of homes sold in October were on the market for less than a month, the NAR said.
At the end of October, the inventory of unsold homes stood at just 1.25 million homes for sale, down 0.8% from September and down 12% from a year ago. At the current sales pace, that amounts to a 2.4 months’ supply, the NAR said.
Despite the historically low interest rates, the lack of supply combined with a surge in home prices has left many would-be buyers frustrated, especially those shopping for homes in the more affordable end of the market.
Among homes priced at $150,000 or less, sales slumped 24% last month, reflecting a dearth of properties available in that price range. Sales of homes in the $250,000 to $500,000 range dropped 2%. Much of October's home sales increase was concentrated among properties that sold for $750,000 and higher, the NAR said.
First-time buyers accounted for 29% of homes sold last month, up from 28% in September. They made up 32% of sales in October last year, the NAR said.
Investors, meanwhile, made up 17% of sales last month, up from 13% in September and 14% in October last year. All-cash sales accounted for 24% of transactions last month, the NAR said. That's up from 23% in September and 19% in October 2020.