- Existing home sales rose +4.3% in October to hit 14-year high
- Fifth straight monthly increase in existing home sales
The housing market continues to be a shiny beacon of light for the US economy. Sales of existing homes increased +4.3% in October, according to the National Association of REALTORS® (NAR), thanks to super low loan borrowing costs and pandemic-caused shifts in housing preferences. Compared to one year ago, home sales increased approximately +27%.
Mark Zandi, chief economist with Moody’s Analytics, said, “In the pandemic, nothing has been more surprising – positively surprising – than single-family housing.” As more and more of us are working remotely, “this is a fundamental shift in underlying housing preferences.”
“So far,” said Sal Guatieri, senior economist with BMP Capital Markets, “the housing market appears immune to the virus due to record-low borrowing costs and teleworkers seeking roomier and cheaper properties outside of major cities.”
NAR’s chief economist, Lawrence Yun, agreed. “Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year. The surge in sales in recent months has now offset the spring market losses.”
MarketWatch projected existing home sales to hit a median rate of 6.5M.
All regions of the country experienced home sales growth with the Midwest leading the way at a growth rate of +8.6%, according to NAR. The ongoing concern is the supply of homes available for sale…inventory of for-sale homes dropped to a 2.5-month’s supply, the lowest inventory supply on record.
Low inventory equals higher prices and in October, the median existing home price came in at $313,000, up +15.5% compared to one year ago at the same time. Interest rates dropped to the lowest level on record for the 13th time this past week. Such low rates gives potential buyers more purchasing power and also motivate those future homeowners to get into the market sooner rather than later in order to lock in cheap financing before such cheapness disappears.
Low interest rates and increasing home sales also spur home improvement. Both Lowe’s and Home Depot reported great sales numbers. Economist Christophe Barraud said, “…home improvement activity is closely correlated with existing sales…”
Savvy prospective sellers want to have their homes be Instagram-able.
Thanks to MarketWatch.