Existing-home sales approach 10-year high in October

Dive Brief:

Existing-home sales continued their upward climb in October to their highest annualized pace in nearly a decade, according to the National Association of Realtors, as pent-up demand continues to be released into the market.
October’s 2% increase from September put the category on pace to add 5.6 million sales of single-family homes, townhomes, condominiums or co-ops for the year — 5.9% ahead of a year ago. The figure is the highest since February 2007, which recorded an annualized rate of 5.79 million sales.
The median existing home price rose 6.0% year-over-year to $232,200 in October, the 56th-consecutive month of price increases. Meanwhile, inventory continues to fall, with unsold properties at a 4.3-month supply in October, down from 4.4. months in September.

Existing home sales October 2016 — National Association of Realtors

Dive Insight:

Tight inventory conditions through the summer created the pent-up demand that has been released into the market this fall, NAR Chief Economist Lawrence Yun said in a release. October’s gains follow a strong September, which had the category on track for 5.36 million sales in 2016, the best year since 2006. September's report called out first-time buyers for taking their largest share of sales in more than four years at 34%. That group returned in October, accounting for 33% of sales.

Still, housing supply remains limited, and in high demand. The NAR reported that inventory fell 0.5% from September and 4.3% from October 2015 to 2.02 million existing homes last month. Meanwhile, properties were on the market for 41 days in October compared to 39 days in September and 57 days in October 2015.

October’s strong housing starts report is hopeful for new construction to allay some of that burden, adding more inventory and reducing price pressure. The single-family category rose 10.7% to 869,000 month over month and 21.7% year over year in October, according to Commerce Department data released last week.

"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," Yun said in a release.

Yun also noted that the post-election spike in interest rates should see some potential buyers purchase now, while the rates may have moved a purchase out of others’ reach.