Existing-home sales were at a seasonally adjusted annual rate of about 5.22 million in October – an increase of 1.4% compared with September but down 5.1% compared with September 2017, according to estimates from the National Association of Realtors (NAR).
It was the first month-over-month increase in more than six months. In September, sales fell by 3.4%.
Three of four major U.S. regions saw gains in sales activity. Sales increased 2.8% in the West, 1.9% in the South and 1.5% in the Northeast but fell 0.8% in the Midwest.
Because sales volume has fallen to such low levels throughout the year, the 1.4% increase hardly means that the market is raging back; rather, it is basically insignificant when compared with the massive drop in volume during the past 12 months.
Lawrence Yun, chief economist for NAR, explains that because home builders ramped up production slightly in the late summer months, the increased supply helped produce a slight increase in total existing home sales.
“After six consecutive months of decline, buyers are finally stepping back into the housing market,” Yun says in a statement. “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.”
The median existing-home price for all housing types in October was $255,400, up 3.8% from October 2017.
October’s price increase marks the 80th straight month of year-over-year gains.
As of the end of October, there were about 1.85 million existing homes available for sale, nationwide, down from 1.88 million in September but up from 1.80 million a year earlier.
That’s about a 4.3-month supply at the current sales pace.
Properties typically stayed on the market for 33 days in October, up from 32 days in September but down from 34 days a year ago, according to NAR.
About 46% of homes sold in October were on the market for less than a month.
NAR includes sales of townhouses, condominiums and co-ops in with its results.
In a statement, Ruben Gonzalez, chief economist with national real estate firm Keller Williams, says despite the slight bump in October, “existing home sales are likely to continue to decline for the rest of the year.”
“We are starting to see a trend, especially on the West Coast, of increasing inventory, but right now those increases haven’t drastically changed inventory levels in those markets and overall inventory remains low nationally,” Gonzalez says.
What’s interesting to note is that as more inventory came online in September and October, the positive effect on buyers was offset by rising mortgage rates.
“Slower price growth in some markets may provide some relief to buyers, but rising mortgage rates will have the dominant impact on affordability for most buyers,” Gonzalez says.
He adds that even though more inventory is available than earlier in the year, “higher mortgage rates have started to slow demand as we move into the final quarter.”
However, as Yun points out, “As more inventory enters the market and we head into the winter season, home price growth has begun to slow more meaningfully.
“This allows for much more manageable, less frenzied buying conditions,” Yun adds.