Big News for Existing Home Sales: 1st Annual Gain of 2014

If October sales of existing homes are an indicationrn2014 may come to a better conclusion than has been expected.  The National Association of Realtors® (NAR) saidrntoday that sales of single-family homes, townhomes, condominiums, and co-ops inrnOctober were at their highest level since September 2013 and, for the firstrntime in a year, exceeded sales a year earlier. </p

Existing home sales rose 1.5 percent in October to arnseasonally adjusted annual rate of 5.26 million in October, the highest since thernsame figure was reached in September 2013, from an upwardly revised rate ofrn5.18 million in September, the second consecutive month-over-month increase.   October’srnsales were also 2.5 percent higher than in October 2013.  </p

Lawrence Yun, NAR chief economist, says the housing market this year hasrnbeen a tale of two halves. “Sales activity in October reached its highestrnannual pace of the year as buyers continue to be encouraged by interest ratesrnat lows not seen since last summer, improving levels of inventory andrnstabilizing price growth,” he said. “Furthermore, the job market has shownrncontinued strength in the past six months. This bodes well for solid demand tornclose out the year and the likelihood of additional months of year-over-yearrnsales increases.”</p

Single-family home sales increased 1.3 percent to a seasonally adjustedrnannual rate of 4.63 million in October from 4.57 million in September, and arernnow 2.9 percent above the 4.50 million pace a year ago.  Existing condominium and co-op sales rose 3.3rnpercent to a seasonally adjusted annual rate of 630,000 units in October fromrn610,000 in September, and were the same as a year earlier. </p

The median existing-home price for all housing types in October wasrn$208,300, an annual increase of 5.5 percent and the 32^nd consecutivernmonth of year-over-year price gains.  Thernmedian existing single-family home price rose 5.6 percent from a year earlierrnto $208,700.  The median existing condornprice was $205,400 in October, which is 4.5 percent higher than a year ago.</p

Housing inventory was down slightly, falling 2.6 percent to 2.22 million existingrnhomes available for sale, up 5.2 percent from 2.11 million homes in Octoberrn2013.  The available homes represent arn5.1-month supply at the current sales pace, the lowest monthly supply sincernlast March.  </p

“The growth in housing supply this year will likely prevent the drasticrnsales slowdown and coinciding spike in home prices we saw last winter due tornlow inventory,” says Yun. “However, more housing starts are needed to increasernsupply, meet current demand and keep price growth in check.”</p

Twenty-nine percent of existing home sales were to first time buyers inrnOctober, the fourth consecutive month with the same percentage.  The first-time buyer share has been below 30rnpercent in 18 of the last 19 months and a separate NAR survey found that thernannual share of first-time buyer has fallen to its lowest level in nearly threerndecades.  Individual sales to investorsrnaccounted for 15 percent of the market in October and 65 percent of them paidrncash.  Cash sales overall accounted forrn27 percent of existing home transactions, up from 24 percent in September butrndown from 31 percent in October of last year. </p

Seven percent of October sales were foreclosures and 2 percent were shortrnsales.  Total distressed home sales were downrnone percentage point from September and represented the third time this yearrnthat those sales have fallen into the single digits.   Foreclosuresrnsold for an average discount of 15 percent below market value in October (14rnpercent in September), while short sales were discounted 10 percent (14 percentrnin September).    </p

“Although distressed sales are trending downward, there are still areasrn(such as judicial states Florida, Maryland and New York) plagued byrnforeclosures, and homeowners faced with the awful choice between a tax billrnthey are unable to pay and losing their home,” says NAR President ChrisrnPolychron.  He said that the NAR was continuingrnto urge the U.S. House to vote on “The Mortgage Forgiveness Tax Relief Act.”   Passage would extend an expired provisionrnthat exempts forgiven mortgage debt from being taxed as income.  </p

A property sold in October was typically on the market for 63 days comparedrnto 56 days in September and 54 days in October 2013.  Short sales were on the market for a medianrnof 150 days in October, while foreclosures sold in 68 days and non-distressedrnhomes took 61 days. Thirty-three percent of homes sold in October were on thernmarket for less than a month.</p

Regionally, October existing-home sales in the Northeast climbed 2.9 percentrnto an annual rate of 710,000, and are 4.4 percent above a year ago. The medianrnprice in the Northeast was $246,900, which is 1.2 percent above a year ago.</p

In the Midwest, existing-home sales jumped 5.1 percent to an annual level ofrn1.24 million in October, and are 2.5 percent higher than October 2013. Thernmedian price in the Midwest was $164,100, up 6.8 percent from a year ago.</p

Existing-home sales in the South increased 2.8 percent to an annual rate ofrn2.17 million in October, and are now 5.3 percent above October 2013. The medianrnprice in the South was $178,000, up 5.1 percent from a year ago.</p

Existing-home sales in the West declined 5.0 percent to an annual rate ofrn1.14 million in October, and remain 3.4 percent below a year ago. The medianrnprice in the West was $296,800, which is 5.0 percent above October 2013.

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