Existing-Home Sales, Prices Rise in October
Existing-Home Sales, Prices Rise in October
11/19/2012 By: Mark Lieberman, Five Star Institute Economist
Weathering Hurricane Sandy, sales of existing-homes increased in October, the National Association of Realtors reported Monday.
Total existing-home sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September. September sales were originally reported at 4.75 million. October home sales are up 10.9 percent over October 2011.
The median price of an existing single-family home was $178,600 in October, up from a downwardly revised $178,300 in September (originally $183,900) and 11.1 percent ahead of the median price in October 2011, $160,300.
Economists had expected existing home sales in September to drop to a seasonally adjusted annual rate of 4.70 million from the originally reported rate. The pending home sales index for August-–which would have led to the October closings reported Monday—had fallen to 99.2 from 101.9 in July. Pending home sales reflect contracts signed, while the report today is based on completed transactions.
Unlike the government report on new home sales which tracks contracts, the NAR report is based on closings, which means this report, though labeled “October,” actually reflects economic conditions in August when contracts were signed.
Though the median price of a single-family home rose in October, the average for the last two months—$178,450—was sharply below the average for the preceding four months—$185,450—and could have contributed to the uptick in sales unforeseen by the market.
Distressed homes—foreclosures and short sales sold at discounts—accounted for 24 percent of October sales. Foreclosures and shorts sales were split evenly at 12 percent, down from September when the split was 13 percent foreclosures and 11 percent short sales. Distressed sales 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.
The arithmetic suggests the prices of homes that were not distressed sales likely fell in October since distressed sales played less of a role in determining the median price, a smaller percentage of sales were foreclosed homes which sell at a deeper discount than short sales.
Total housing inventory at the end of October fell 1.4 percent to 2.14 million existing-homes available for sale, a 5.4-month supply at the current sales pace, down from 5.6 months in September, and is the lowest housing supply since February of 2006 when it was 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 the storm hit, but the growing demand with limited inventory is pressuring home prices in much of the country,” acknowledged Lawrence Yun, the 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.”
The median time on market was 71 days in October, little changed from 70 days in September, but down 26.0 percent from 96 days in October 2011, the NAR said.
All-cash sales were at 29 percent of transactions in October, up slightly from 28 percent in September; they were 29 percent in October 2011. Investors, who account for most cash sales, purchased 20 percent of homes in October, up from 18 percent in September; they were 18 percent in October 2011, according to the NAR.
Sales improved in three of the four Census regions in October as prices fell month-month in two regions.
Regionally, existing-home sales fell 1.7 percent in the Northeast to an annual pace of 580,000 in October up 13.7 percent from October 2011. The median price in the Northeast was $232,600, down from $235,400 in September but 4.6 percent above a year ago.
Existing-home sales in the Midwest rose 1.8 percent in October to 1.11 million and are 18.1 percent above a year ago. The median price in the Midwest was $145,600, up from $145,300 in September and up 10.6 percent from October 2011.
In the South, existing-home sales increased 2.1 percent to an annual pace of 1.92 million in October and are 11.0 percent higher than October 2011. The median price in the South was $152,200, up from $150,500 in September and up 8.2 percent from a year ago.
Existing-home sales in the West rose 4.4 percent to an annual level of 1.18 million in October and are 3.5 percent above a year ago. The median price in the West was $242,100, down from $245,300 in September but up 21.2 percent from October 2011.