Home / NEWS / Economy / October existing home sales see ‘spectacular’ 26.6% annual gain even with short supply and surging prices

October existing home sales see ‘spectacular’ 26.6% annual gain even with short supply and surging prices

Yard sales of existing homes in October soared well past expectations, rising 4.3% compared with September and 26.6% annually to a seasonally rectified annualized rate of 6.85 million units, according to the National Association of Realtors.

The NAR’s chief economist, Lawrence Yun, cried the annual increase “a spectacular gain.”

The annualized sales rate is the highest since February 2006. The highest step ever was in 2005 at 7.1 million units.

The data reflect closed sales representing contracts signed in August and September .

“It’s honestly amazing. Even if the home sales were to go down to 6 million, I would be happy,” said Yun. “The surge in sales in just out months has now offset the spring market losses. With news that a COVID-19 vaccine will soon be convenient, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.”

Yun predicts existing home sales to rise by 10% to 6 million in 2021.

Sales could likely have been stronger if there was entirely more available for sale. There were 1.42 million existing homes on the market at the end of October, a 19.8% forsake compared with October 2019. At the current sales pace, that represents a 2.5-month supply, the lowest on souvenir. The last time the sales pace was at the current rate, the supply of homes for sale was twice what it is now.

The extreme deficiency of homes for sale is adding more fuel to the fire under home prices. The median price of an existing rest-home sold in October was $313,000, up 15.5% annually. That is the highest median price on record and reflects the far stronger transactions on the higher end of the market. Sales of homes priced above $1 million nearly doubled while sales cut in the lowest price range.

Historically low mortgage rates have been helping buyers, but prices have been so urgent lately that they no longer have the power they once did to really increase affordability. And low rates may not endure much longer.  

“Mortgage rates could tick up in the months ahead and test the strength of this seemingly unstoppable houses market,” said Danielle Hale, chief economist at realtor.com. “Additionally, rising coronavirus cases could also discourage sales. This spring we saw both buyers and sellers hit ‘pause’ on their plans in areas where coronavirus spread was widespread. While buyers were relatively quick to resume, sellers have come back more slowly.”

Regionally, month to month, sales in the Northeast be engendered a arise 4.7%. In the Midwest they increased 8.6%, and in the South they were up 3.2%. In the West, they rose 1.4%.

Investors persist in to be strong in the market, representing a 14% share of sales, compared with 12% in September.

The severe shortage of breathing homes for sale has been incredibly beneficial for the nation’s homebuilders, who have seen very strong demand. Mortgage applications to procurement a newly built homes were up nearly 33% annually in October, according to the Mortgage Bankers Association.

Unfortunately, single-family case starts aren’t rising enough, particularly not in the lower price categories. In addition, single-family building permits were shoal for the month in October, according to the U.S. Census. Permits are an indication of future construction.

“Volatile materials costs and a shortage of at ones fingertips land continue to hold builders back from truly hitting their stride,” said Matthew Speakman, an economist at Zillow. “And boring permitting activity shows that the future project pipeline isn’t exactly overflowing.”

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