The Autumn Revival: Home Sales Surge

National Association of Realtors - 22 November 2016

For the second consecutive month, existing-home sales were on the rise, ascending above June’s cyclical sales peak to become the highest annualized pace in nearly a decade, the National Association of REALTORS® reported Tuesday. All major regions across the country saw an increase last month.

Total existing-home sales – which are completed transactions that include single-family homes, townhomes, condos, and co-ops – increased 2 percent to a seasonally adjusted annual rate of 5.60 million in October. The pace of existing-home salesis 5.9 percent higher than a year ago (5.29 million), rising above June’s pace of 5.57 million. It was the highest sales pace since February 2007.

Lawrence Yun, NAR’s chief economist, is calling the sales increase an “autumn revival” for the housing market.

“October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” Yun says. “Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes.”

Further, the tightening labor market is pushing up wages and the economy is showing greater expansion, Yun says. “These two factors and low mortgage rates he kept buyer interest at an elevated level so far this fall,” he adds.

5 Stats to Gauge the Market

Here’s a closer look at some key indicators with existing-home sales from NAR’s latest data release.

1. Home prices: The median existing-home price for all housing types in October was $232,200. That is a 6 percent increase from a year ago.

2. Days on the market: Forty-three percent of homes sold in October were on the market for less than a month, according to NAR’s report. Properties stayed on the market an average of 41 days in October, down from 57 days a year ago. Short sale properties were on the market the longest amount of time for a median of 99 days; foreclosures typically sold in 50 days; and non-distressed homes were on the market a median of 39 days.

3. All-cash sales: Transactions involving all-cash consisted of 22 percent of sales in October, down from 24 percent a year ago. Individual investors account for the biggest bulk of cash sales. They purchased 13 percent of homes in October, unchanged from a year ago.

4. Distressed sales: Foreclosures and short sales comprised 5 percent of sales in October, down from 6 percent a year ago. Four percent of last month’s sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value last month while short sales were discounted an average of 16 percent.

5. Inventories: Total housing inventories dropped 0.5 percent to 2.02 million existing homes available for sale by the end of October. That is 4.3 percent lower than a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace.

Regional Breakdown

Here is a closer look at existing-home sales across the country:

  • Northeast: existing-home sales rose 1.4 percent to an annual rate of 750,000, and are 1.4 percent higher than a year ago. Median price: $255,500 -- 2.9 percent above a year ago.
  • Midwest: existing-home sales increased 2.3 percent to an annual rate of 1.36 million in October, and are 6.3 percent above a year ago. Median price: $181,500, up 5.8 percent from a year ago.
  • South: existing-home sales rose 2.8 percent to an annual rate of 2.22 million, and are 4.7 percent above a year ago. Median price: $202,300, up 7.4 percent from a year ago.
  • West: existing-home sales increased 0.8 percent to an annual rate of 1.27 million in October, and are 10.4 percent higher than a year ago. Median price: $345,800, up 7.8 percent from a year ago.

Source: National Association of REALTORS®