A slight rise in home sales moved higher in October despite the forecast they would do the opposite, underscoring the strong requirement for housing across the country. National Association of Realtors said this Monday, that there is a slight rise of 0.8% in home sales between September and October, thus hitting a seasonally-adjusted, annual rate of 6.34 million. They say that the sales were up by 5.8% in comparison to last year’s sales.
Lawrence Yun, the chief economist at the National Association of Realtors, said in his report that “Home sales remain resilient, despite low inventory and increasing affordability challenges”. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some proposed buyers searching the protection of a fixed, consistent mortgage payment”. Economists polled by Market Watch have projected existing home sales to come in at 6.2 million.
What happened during this time?
On a regional basis, existing home sales only rise in the South and the Midwest. Meanwhile, the number of residential homes sold declined in the Northeast region every month and remained flat in the West region. The median price for an existing home sold in October was $353,900, which is higher by 13% as compared to the previous year’s home sale. On the other hand, unsold inventory was at a 2.4 month supply, equal to the previous month. A 6 month supply of homes is contemplated to be a sign of a balanced market. All-cash sales illustrated nearly a quarter of all transactions in October, up on both a monthly and annual basis.
The picture at a wider angle: A slower, but strong, housing market
The housing market has come back down to Earth after the number of homes sold ascended last year. But that does not mean the market is any easier to navigate for home buyers.
Danielle Hale, chief economist at realtor.com said that “One year ago marked a peak of existing home sales activity as the combination of fundamental and opportunity drove many Americans to search for housing at a time of year that does not customarily see a frenzied level of buyers in the market”. Hale noted that “activity remains certainly above recent annual purchase totals of the property”, despite not being near its peak from last year. She said that this is a consideration of various real estate factors, including, the large number of Americans who are at the prime age to purchase their first home. The remote-working opportunities that concur those buyers to acknowledge a wider array of real estate markets. She further added that “the sales pace could begin to pick up as still-eager real estate buyers seemingly see more newly-listed residential homes, with the majority of prospective real estate sellers planning to enter the real estate market within the next six months”.
What they are saying?
Sal Guatieri, a senior economist at BMO Capital Markets, wrote in his report that “Sales are well-supported by low-interest rates and strong job growth, but have been held back by lean listings and fading affordability”.
Rubella Farooqi, the chief US economist at High-Frequency Economics, wrote in a research note that “Low inventories and high prices have enclosed affordability, and sales of both existing and new homes have come off pandemic highs. Note that inventories have been steadily rising, and the median price of existing homes has declined on a month-to-month basis over the last three months, signaling some constraint from record highs”.
Market Reaction
The Dow Jones Industrial Average and the S&P 500 were both up marginally in Monday morning trading ahead of the report’s release, following the announcement that President Biden would nominate Jerome Powell chairman of the Federal Reserve for the second term.
