Existing home sales ended a six-month skid in October, climbing 1.4 percent from September. Despite the monthly gain, existing home sales were still down 5.1 percent, versus October of last year, according to the latest data from the National Association of Realtors.
“After six consecutive months of decline, buyers are finally stepping back into the housing market,” NAR Chief Economist Lawrence Yun said. “Gains in the Northeast, South and West – a reversal from last month’s steep decline or plateau in all regions – helped overall sales activity rise for the first time since March 2018.”
Home prices continued to rise, with the median existing home price reaching $255,400 in October – a 3.8 percent year-over-year gain. The price increase marks the 80th straight month of year-over-year median existing home prices gains.
Unsold inventory is at a 4.3-months supply level, at the current sales pace, which is down from 4.4 months in September, but up from 3.9 months a year ago.
“As more inventory enters the market and we head into the winter season, home price growth has begun to slow more meaningfully,” Yun said. “This allows for much more manageable, less frenzied buying conditions.”
Ruben Gonzalez, the chief economist at Keller Williams said we will likely see year-over-year sales decline through the rest of the year, even as inventory rises in some markets, especially on the West Coast.
“Overall, the market continues to be characterized by low inventory levels as it has throughout the year,” Gonzalez said. “However, now inventory appears to have begun to move in the other direction and higher mortgage rates are starting to slow demand as we move into the final quarter of the year.”
Danielle Hale, the chief economist at realtor.com said that, despite the monthly rise, home sales still being below 2017 levels shows that consumers are less optimistic about home buying right now and builders are starting to notice, as evidenced by the dip in housing starts reported yesterday.
“Looking ahead, starts could slip further if builders believe the consumer pause will continue and they adjust production accordingly,” Hale said. “Rising home prices and rising mortgage rates have created high hurdles for homebuyers while cost increases make it difficult for builders to deliver homes at the price points that are most in-demand. The result has been a stalemate between buyers and sellers, with fewer transactions than we saw a year ago.”
Cheryl Young, the senior economist at Trulia, believes that home buyers anticipating a weakening market, are contributing to the low levels of transactions.
“Home buyers, sensing a weaker housing market, found themselves in a holding pattern as they anticipated opportunities to take advantage of less competition, slightly more inventory and softening prices in the months to come,” Young said.
Regionally, sales were up, month-over-month in every region but the Midwest. Sales declined in all four regions of the country, from October of last year, with the starkest difference in the West, where sales are 11.2 percent.