Sales of existing homes increase slightly as demand for housing remains strong

Sales of existing homes rose in October despite expectations that they would do the opposite, underscoring strong demand for homes across the country.

Existing home sales rose 0.8% between September and October, reaching a seasonally adjusted annual rate of 6.34 million, the National Association of Realtors said on Monday. Compared to a year ago, sales are down 5.8%.

“Home sales remain resilient despite low inventories and growing affordability challenges,” Lawrence Yun, chief economist at the National Association of Realtors, said in the report. “Inflationary pressures, such as rapidly rising rents and rising consumer prices, may cause some potential buyers to seek the protection of a fixed, consistent mortgage payment. “

Economists surveyed by MarketWatch had projected sales of existing homes at 6.2 million.

What happened

On a regional basis, sales of existing homes increased only in the South and Midwest. Meanwhile, the number of homes sold declined in the Northeast on a monthly basis and remained stable in the West.

The median price of an existing home sold in October was $ 353,900, up more than 13% from a year ago. The unsold inventory was at a 2.4 month supply, equal to the previous month. A 6-month housing supply is seen as a sign of a balanced market.

Cash sales accounted for 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 returned to Earth after the number of homes sold soared last year. But that doesn’t mean the market is easier to navigate for home buyers.

“A year ago, existing home sales activity peaked as the combination of need and opportunity drove many Americans to seek housing at a time of year that generally not a frantic level of buyers in the market, ”said Danielle Hale, chief economist at Realtor.com.

Hale noted that “activity remains significantly above recent annual totals,” although it is not near its peak last year. This reflects multiple factors, including, she said, the large number of Americans who are in their prime to buy first-time homes and the remote work opportunities that allow those homebuyers to consider a wider range of markets.

“Additionally, the pace of sales could start to pick up, as buyers still keen to potentially see more newly listed homes, with the majority of potential sellers planning to enter the market within the next six months,” added Tan.

What they say

“Sales are well supported by low interest rates and strong job growth, but have been held back by lean listings and weaker affordability,” wrote Sal Guatieri, senior economist at BMO Markets. capital, in a report.

“Low inventory and high prices have had an impact on affordability, and sales of existing and new homes have reached pandemic highs. Note that inventories have gradually increased and the median price of existing homes has fallen month over month over the past three months, signaling some moderation from record highs, ”Rubeela Farooqi, chief economist of United States at High Frequency Economics, writes in a research note.

Market reaction

The Dow Jones Industrial Average and the S&P 500 were both edged higher on Monday morning before the report’s release, following news that President Biden would appoint Jerome Powell for a second term as Federal Reserve chairman.

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