NAR: U.S. Existing-Home Sales Jump 4.3% in October
Year-to-year, Oct. sales rose 26.6%, up for the fifth month in a row. “The housing sector has performed remarkably well” considering everything, says NAR economist.
WASHINGTON – Existing-home sales continued to trend upward in October, marking five consecutive months of month-over-month gains, according to the National Association of Realtors®’ (NAR) monthly survey. All four major regions had both month-over-month and year-over-year growth.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – increased 4.3% from September to a seasonally-adjusted annual rate of 6.85 million in October. However, year-to-year sales surged, up 26.6% compared to October 2019 (5.41 million).
“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” says Lawrence Yun, NAR’s chief economist.
While coronavirus-induced shutdowns hindered virtually all markets, Yun says the housing industry mounted an impressive rebound.
“The surge in sales in recent months has now offset the spring market losses,” Yun says. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” Yun forecasts existing-home sales to rise by 10%, to 6 million, in 2021.
The median existing-home price for all housing types in October was $313,000, up 15.5% from October 2019 ($271,100), with higher prices seen in every region. October’s national price increase marks 104 straight months of year-over-year gains.
However, the inventory of for-sale properties continues to lag. Total housing inventory at the end of October was 1.42 million units, down 2.7% from September and down 19.8% year-to-year (1.77 million). Unsold inventory is at an all-time low 2.5-month supply at the current sales pace, down from 2.7 months in September and 3.9-months in October 2019.
“Homebuilders’ confidence has soared even though the actual production has not,” Yun adds. “All measures, such as reduction to lumber tariffs and expansion of vocational training, need to be considered to significantly boost supply and construct new housing.” He says replenishing the short supply of homes would help decelerate rising costs and improve market affordability.
Properties typically remained on the market for 21 days in October, seasonally even with September and down from 36 days in October 2019. During the month, about three out of four listings (72%) were on the market for less than a month.
First-time buyers were responsible for 32% of sales in October, up from the 31% in both September 2020 and October 2019.
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in October, a small increase from the 12% figure recorded in September 2020 and equal to October 2019. All-cash sales accounted for 19% of transactions in October, up from 18% in September but unchanged from October 2019.
Distressed sales – foreclosures and short sales – represented less than 1% of sales in October, equal to September’s percentage but down from 2% in October 2019.
“Faced with many uncertainties in 2020, the real estate industry has been able to meet surprisingly strong homebuying demand and help lead our country’s economic recovery,” said NAR President Charlie Oppler. “As we continue to help consumers secure housing and property, we will also remain vigilant in working to expand housing options, equality and affordability for all who are entering the marketplace.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.83% in October, down from 2.89% in September. The average commitment rate across all of 2019 was 3.94%.
Single-family and condo/co-op sales: Single-family home sales sat at a seasonally adjusted annual rate of 6.12 million in October, up 4.1% from 5.88 million in September, and up 26.7% from one year ago. The median existing single-family home price was $317,700 in October, up 16.0% from October 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 730,000 units in October, up 5.8% from September and up 25.9% from one year ago. The median existing condo price was $273,600 in October, an increase of 10.3% from a year ago.
Regional breakdown: Median home prices increased at double-digit rates in each of the four major regions from one year ago. October 2020 saw existing-home sales in the Northeast climb 4.7%, recording an annual rate of 900,000, a 30.4% increase from a year ago. The median price in the Northeast was $356,500, up 20.2% from October 2019.
Existing-home sales jumped 8.6% in the Midwest to an annual rate of 1,640,000 in October, up 28.1% from a year ago. The median price in the Midwest was $243,500, a 16.7% increase from October 2019.
Existing-home sales in the South increased 3.2% to an annual rate of 2.91 million in October, up 26.5% from the same time one year ago. The median price in the South was $272,500, a 15.7% increase from a year ago.
Existing-home sales in the West inched up 1.4% to an annual rate of 1,400,000 in October, an 22.8% increase from a year ago. The median price in the West was $467,800, up 15.1% from October 2019.
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