Existing Home Sales Make October Gains

Sales of existing homes in October made gains following a downwardly revised September, though the impact of Hurricane Sandy on the Northeastern housing market, combined with the onset of winter, has yet to impact sales levels.

The existing home sales rate rose 2.1 percent in October, and home prices increased as market inventories fell to a six-year low.

Existing homes sold at a 4.79 million-unit annual rate (seasonally adjusted) in October, following a downwardly revised 4.69 million-unit rate in September. The most recent reading, from a National Association of Realtors (NAR) report, showed a 10.9 percent gain over the 4.32 million-unit rate in October 2011.

The national median existing-home price for all housing types – which includes single-family homes, townhomes, condominiums and co-ops – was $178,600 in October, which is 11.1 percent above a year ago. This marks eight consecutive monthly year-over-year increases, which last occurred from October 2005 to May 2006.

Total housing inventory fell 1.4 percent to 2.14 million existing homes available for sale, representing a 5.4-month supply at the current sales pace, down from 5.6 months in September. The housing supply is at its lowest level since February of 2006, when it reached 5.2 months. Listed inventory is 21.9 percent below a year ago, when there was a 7.6-month supply.

"Home sales continue to trend up and most October transactions were completed by the time [Hurricane Sandy] hit, but the growing demand with limited inventory is pressuring home prices in much of the country," said Lawrence Yun, NAR's chief economist. "We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions."

Distressed homes - foreclosures and short sales sold at deep discounts - accounted for 24 percent of October sales (12 percent were foreclosures and 12 percent were short sales), unchanged from September; they were 28 percent in October 2011. Foreclosures sold for an average discount of 20 percent below market value in October, while short sales were discounted 14 percent.