After a tough year, existing-home sales rose to the highest they have been since earlier this summer. Job growth is reassuring more households that now is a good time to buy, said NAR’s Lawrence Yun. The market will remain competitive throughout the winter season and sales may see unexpectedly high growth depending on future market conditions.
- Existing-home sales rose 2% in October to 5.48 million
- Sales are at their strongest pace since June
- Housing inventory fell 3.2% in October to 1.80 million existing homes for sale
- Inventory in October was 10.4% lower than a year ago
- Median home price in October was $247,000 – 5.5% higher than a year ago
“Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which is in turn giving households added assurance that now is a good time to buy a home,” said NAR chief economist Lawrence Yun. “While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated.”
Although existing-home sales have increased for the past two months, they are still lagging behind last year’s numbers. Sales rose to 5.48 million in October, the highest they have been since they hit 5.51 million in June earlier this year. But they still remain 0.9% lower than October 2016 when they were sitting at 5.53 million. In addition, sales rose to about 5.6 million in November 2016. It will be hard for the housing market today to keep up with those numbers as we move approach the end of 2017.
It is possible, however, that existing-home sales will end the year strong because the housing market is expected to fully rebound from recent hurricane damage by the end of the year. “The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms,” Yun said.
Housing inventory continues to drag down the housing market despite solid job and wage growth. Inventory fell another 3.2% in October, making it the 29th consecutive month that inventory decreased year-over-year. Unsold inventory is at a 3.9-month supply, the lowest it has been since March and significantly lower than the 4.4-month supply in October last year. Supply is currently 25% lower than it was in October 2014 and 11.4% lower than October 2016.
Home prices are still remarkably high. The median existing-home price in October was $247,000, a big jump from last year’s $234,100. As of October, home prices have increased year-over-year for 68 consecutive months and are likely to continue the trend. According to the NAR’s 2018 forecast, however, price growth will gradually slow throughout next year. It’s unlikely we will see any large drop in home prices, but the market will not be able to sustain prices’ current growth rate for much longer.
Moving forward, low inventory and high prices will continue to fuel a competitive market. “Listings — especially those in the affordable price range — continue to go under contract typically a week faster than a year ago, and even quicker in many areas where healthy job markets are driving sustained demand for buying,” Yun said. “With the seasonal decline in inventory beginning to occur in most markets, prospective buyers will likely continue to see competitive conditions through the winter.”