A Turnaround in Home Sales: More Business Is Coming to Town
November 21, 2018
The streak of sluggish home sales finally came to an end in October. Following six consecutive months of decreases, existing-home sales reversed to post a rise last month, the National Association of REALTORS® reported Wednesday. Three of the four major regions of the U.S. reported gains in October.
Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and co-ops—increased 1.4 percent in October from September. Sales, however, are still down 5.1 percent from a year ago.
“Buyers are finally stepping back into the housing market,” says Lawrence Yun, NAR’s chief economist. “Gains in the Northeast, South and West—a reversal from last month’s steep decline or plateau in all regions—helped overall sales activity rise for the first time since March 2018.”
Here’s a closer look at how existing-home sales fared in October:
Home prices: The median existing-home price for all housing types in October was $255,400, up 3.8 percent from October 2017 ($246,000).
Inventories: The number of homes for sale at the end of October fell from 1.88 million in September to 1.85 million existing homes available for sale. Unsold inventory is at a 4.3-month supply at the current sales pace, up from 3.9 months a year ago.
Days on the market: Forty-six percent of homes sold in October were on the market for less than a month. Properties typically stayed on the market for 33 days in October, up from 32 days in September but down from 34 days a year ago. “As more inventory enters the market and we head into the winter season, home price growth has begun to slow more meaningfully,” Yun says. “This allows for much more manageable, less frenzied buying conditions.”
First-time buyers: First-time buyers accounted for 31 percent of sales last month, down from 32 percent a year ago. “Rising interest rates and increasing home prices continue to suppress the rate of first-time homebuyers," Yun says. "Home sales could further decline before stabilizing. The Federal Reserve should, therefore, re-evaluate its monetary policy of tightening credit, especially in light of softening inflationary pressures, to help ease the financial burden on potential first-time buyers and ensure a slump in the market causes no lasting damage to the economy."
All-cash sales: All-cash sales accounted for 23 percent of transactions in October, up from 20 percent a year ago. Individual investors, who account for the bulk of cash sales, purchased 15 percent of homes in October, up from 13 percent a year ago.
Distressed sales: Foreclosures and short sales represented 3 percent of sales in October, the lowest since NAR began tracking in October 2008. Broken out, 2 percent of October sales were foreclosures and 1 percent were short sales.
Updated: December 14, 2018