Despite rising mortgage rates and a tight listing inventory (down 12% year-to-year), determined Americans kept purchasing homes in Oct.
WASHINGTON – Even with market challenges, existing-home sales increased in October, marking two straight months of growth, according to the National Association of Realtors® (NAR).
Two of the four major U.S. regions NAR tracks saw month-over-month sales climb, one region reported a drop and the fourth area held steady in October. On a year-over-year basis, however, home sales were down in every region.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – rose 0.8% from September to a seasonally adjusted annual rate of 6.34 million. However, sales fell 5.8% year-to-year (6.73 million in October 2020).
“Home sales remain resilient, despite low inventory and increasing affordability challenges,” says Lawrence Yun, NAR’s chief economist. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”
Total housing inventory at the end of October amounted to 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September’s supply, and down from 2.5 months in October 2020.
In October, the median existing-home price for all housing types was $353,900 – a 13.1% year-to-year increase, with prices up in all four regions studied. It marks 116 straight months of year-over-year price increases, the longest-running streak on record.
“Among some of the workforce, there is an ongoing trend of flexibility to work anywhere, and this has contributed to an increase in sales in some parts of the country,” says Yun. “Record-high stock markets and all-time high home prices have worked to significantly raise total consumer wealth and, when coupled with extended remote work flexibility, elevated housing demand in vacation regions.”
Properties typically remained on the market for 18 days in October, up from 17 days in September and down from 21 days in October 2020. Eight out of 10 homes (82%) sold in October were on the market for less than a month.
In October, 29% of sales went to first-time buyers, up from 28% in September and down from 32% in October 2020.
Individual investors or second-home buyers, which make up many cash sales, purchased 17% of homes in October, up from 13% in September and 14% in October 2020. All-cash sales accounted for 24% of transactions in October, up from 23% in September and 19% in October 2020.
Distressed sales – foreclosures and short sales – represented less than 1% of sales in October, equal to the percentage seen a month prior and equal to October 2020.
According to Freddie Mac, October’s average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.07%, up from 2.90% in September. The average commitment rate for all of 2020 was 3.11%.
Single-family and condo/co-op sales: Single-family home sales rose to a seasonally adjusted annual rate of 5.66 million in October, up 1.3% from 5.59 million in September and down 5.8% year-to-year. The median existing single-family home price was $360,800 in October, up 13.5% since October 2020.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 680,000 units in October, down 2.9% from 700,000 in September and down 5.6% from one year ago. The median existing condo price was $296,700 in October, an annual increase of 8.7%.
Regional breakdown: Existing-home sales in the Northeast fell 2.6% in October (an annual rate of 750,000), down 13.8% decline from October 2020. The median price in the Northeast was $379,100, up 6.4% year-to-year.
Existing-home sales in the Midwest rose 4.2% to an annual rate of 1,500,000, a 6.3% decrease from a year ago. The median price in the Midwest was $259,800, 7.8% higher year-to-year.
Existing-home sales in the South increased 0.4% in October, posting an annual rate of 2,780,000, a 3.5% drop from one year ago. The median price in the South was $315,500, a 16.1% climb from one year prior.
Existing-home sales in the West were unchanged month-to-month (annual rate of 1,310,000), but they were down 5.1% year-to-year. The median price in the West was $507,200, up 7.7% from October 2020.