Existing-home sales in every region of the country jumped in October, and overall existing sales hit their highest point since the middle of 2007. The National Association of Realtors reported that existing sales climbed 2 percent from September and 6 percent from last year. October finished with an annual pace of 5.6 million existing-home sales.
Existing sales were most robust in the South, increasing nearly 3 percent from September. The weakest region was the West, which still grew nearly 1 percent.
Lawrence Yun, NAR’s chief economist, attributed October’s numbers to the release of the “unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply. Buyers are having more success lately, despite low inventory and prices that continue to swiftly rise above incomes.”
David Berson, chief economist at Nationwide, said that the months’ supply of homes for sale dropped to 4.3, in response to both the rise in sales and fewer than normal homes for sale.
“This is likely due to a combination of a still-large, albeit falling, number of homes with underwater mortgages and households that had gotten rock-bottom mortgage rates in recent years being unwilling lose that low rate by purchasing another home today,” Berson said.
Ralph McLaughlin, chief economist at Trulia, said that October’s 4.3 percent drop in inventory over last year is “yet another reminder that the housing market still faces headwinds toward a full recovery.”
McLaughlin, however, hopes the new administration will seize opportunities to change tight inventories.
“President-elect Trump could help boost inventory by implementing policies that would encourage investors to sell homes they bought during the foreclosure crisis, many of which are suitable for starter home buyers,” McLaughlin said. “Such policies could include a reduction in capital gains taxes for homes sold by investors to owner-occupiers, an increase in tax rates on rental income, or both.”
Yun said that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion‒‒two factors that, combined with low mortgage rates “have kept buyer interest at an elevated level so far this fall."
Yun called the ramp-up in housing starts in October “a hopeful sign that overall supply can steadily increase enough to provide more choices for buyers and also moderate price growth.”