Existing Home Sales Revive in October on Low Interest Rates

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – ROSE percent, 100,000, in October to a seasonally adjusted annual sales rate of 5.46 million;
  • Sales pace for September was revised down 20,000 to 5.46 million, increasing the drop for September to 2.5 percent from the originally reported 2,2 percent;
  • Median price of an existing single-family home FELL 0.2 percent, $600, to $270,900;
  • Year-year the median price is up 6.2 percent or $15,800;
  • Number of homes available for sale FELL 2.7 percent to 1.77 million;
  • The months’ supply of homes for sale in September FELL 0.2 months to 3.9 months.

Trends:

  • The October increase in the pace of closings was the third in the last four months;
  • Year-year sales were UP for the fourth consecutive month;
  • The median price of an existing single-family home FELL for the fourth straight month, down just over 5 percent in that stretch;
  • The inventory of homes for sale dropped for the fourth straight month; the months’ supply of homes for sale fell to the lowest level since March.

Data Source: National Association of Realtors: (NAR)

Image result for home sales

Homebuyers continued to shop by monthly payment, bargaining for lower prices even as mortgage interest rates remained near historic lows in October.

The average rate for a 30-year fixed rate mortgage was 3.69 percent in October, only a tad above the 3.61 percent average in September. Even with the decline in the median home price, the interest rate increase would bump the average mortgage payment (principal and interest) to $1,245.38 from $1,235.89 (about $9.49).

While this report is a positive in that sales improved, the increase in sales was weak. Sales have increased in six of the first 10 months this year with the average increase for the other five months about 3.6 percent, almost twice the October boost.

And the drop in the inventory of homes for sale, threatens sales for the rest of the year when homebuying typically falls off. The expected drop in closings for the balance of the year would have a negative impact on sales at furniture and appliance stores.

The four-month decline in the median price of an existing home matches a streak in the middle of last year though in 2018, home sales themselves fell despite the lower prices; interest rates were almost a full point higher.

According to the NAR, first-time buyers accounted for 31 percent of October closings, down from 33 percent in September, underscoring the concerns of younger families about homebuying. The homeownership percentage of those under 35has averaged 36.4 percent this year, barely above the 36.3 percent last year.

Hear Mark Lieberman every Friday, on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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