October Existing-Home Sales Show Modest Gain

Total existing-home sales rose 0.5 percent to a seasonally adjusted annual rate of 6.24 million units in October, but were down 11.5 percent from a year earlier.
NAR: REALTOR® Magazine Online
Sales of existing homes held steady with a modest gain last month, another indication the housing market is transitioning into a more normal market in contrast with unsustainable activity last year, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — rose 0.5 percent to a seasonally adjusted annual rate of 6.24 million units in October from an upwardly revised pace of 6.21 million in September, but were 11.5 percent below the 7.05 million-unit level in October 2005.

“The present level of home sales demonstrates some confidence in the market, but sales are lower than sustainable due to psychological factors,” says David Lereah, NAR’s chief economist. “The demographics of our growing population, historically low and declining mortgage interest rates, and healthy job creation mean the wherewithal is there to buy homes in most of the country, but many buyers remain on the sidelines. After a period of price adjustment, we’ll see more confidence in the market and a lift to home sales should be apparent in the first quarter of 2007.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional fixed-rate mortgage was 6.36 percent in October, down from 6.4 percent in September but up from 6.07 percent in October 2005. Last week, Freddie Mac reported the 30-year rate dropped to 6.18 percent — the lowest since January of this year.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, says sellers in most of the country are doing what it takes to attract buyers. “With the exception of parts of the West, sellers are cutting their price enough to encourage sales,” she says. “It’s an especially good market for sellers in areas with rising jobs and a growing population where prices remain moderate — those are the areas now with the strongest price growth. On the opposite extremes, about 10 percent of the country is experiencing economic weakness, and a fourth of the nation — areas that had the biggest boom — is in a correction that will take longer to balance.”

The national median existing-home price for all housing types was $221,000 in October, which is down 3.5 percent from October 2005 when the median price spiked above adjacent months to $229,000.

“The annual decline in the October median home price is skewed because there was an uncharacteristic spike in October 2005, but the trend for the fourth quarter will be prices remaining slightly below a year ago. Overall prices are projected to see modest appreciation around early spring,” Lereah says.

National Numbers

Total housing inventory levels increased 1.9 percent at the end of October to 3.85 million existing homes available for sale, which represents a 7.4-month supply at the current sales pace.

Single-family home sales rose 1.3 percent to a seasonally adjusted annual rate of 5.5 million in October from a level of 5.43 million September, but were 11 percent below the 6.18 million-unit pace in October 2005. The median existing single-family home price was $221,300 in October, down 3.4 percent from a year earlier.

Existing condominium and cooperative housing sales fell 4.8 percent to a seasonally adjusted annual rate of 741,000 units in October from an upwardly revised 778,000 in September, and were down 14.5 percent from the 867,000-unit level in October 2005. The median existing condo price was $214,300 in October, which is 5.3 percent lower than the previous year.

Regional Reports

Existing-home sales in the West rose 6.4 percent to an annual pace of 1.33 million in October, but were 18.9 percent lower than a year earlier. The median price in the West was $340,000, down 0.6 percent from October 2005.

In the Midwest, existing-home sales were unchanged in October, holding at a level of 1.41 million, but were down 10.2 percent from a year ago. The median price in the Midwest was $170,000, a drop of 1.2 percent from October 2005.

Existing-home sales in the South slipped 1.2 percent to an annual sales rate of 2.49 million in October, down 8.8 percent from the same period a year ago. The median price in the South was $185,000, down 7 percent from a spike in October 2005.

Existing-home sales in the Northeast declined 2.9 percent to a level of 1.01 million in October, and were down 9.8 percent from October 2005. The median existing-home price in the Northeast was $254,000, a drop of 5.2 percent from a year earlier.