Sales of pre-owned homes improved for a second straight month in October, beating their year-ago levels for the first time in a year even as the typically slower fourth quarter got underway.
Total existing-home sales in October, including single-family houses, townhomes, condominiums, and co-ops, came in at a seasonally adjusted annual rate of 5.26 million, up 1.5 percent from an upwardly revised estimate of 5.18 million in September, according to transaction data from the National Association of Realtors (NAR).
With October's increase, sales are at their highest annual pace since September 2013 and are now above year-ago levels for the first time since last October.
"Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth," said NAR Chief Economist Lawrence Yun.
"Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year-over-year sales increases," he continued.
It's been a rollercoaster year for existing-home sales, which spent much of the first half of 2014 under the 4 million mark as the economy experienced an early stall. Since then, sales numbers have crept up but still hadn't been able to match 2013's pace until October.
The month's gain came despite a 2.6 percent drop in total housing inventory, which was estimated at 2.22 million existing homes available for sale as of October 31. Compared to last year, unsold inventory is up 5.2 percent, a factor Yun says will help stave off the kind of slump the market saw last year.
"The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory," he said. "However, more housing starts are needed to increase supply, meet current demand and keep price growth in check."
Sales were up on a monthly basis in three of the four census regions, climbing 2.9 percent in the Northeast to a rate of 710,000, 5.1 percent in the Midwest to a rate of 1.24 million, and 2.8 percent in the South to a rate of 2.17 million. Existing-home sales were down 5.0 percent in the West to an annual pace of 1.14 million.
Annually, sales of existing homes were up 4.4 percent in the Northeast, 2.5 percent in the Midwest, 5.3 percent in the South, and down 3.4 percent in the West.
The median existing-home price for all housing types last month was $208,300, according to NAR, a 5.5 percent annual increase. October was the 32nd straight month in which prices improved year-over-year.
The share of first-time homebuyers in October was 29 percent for the fourth consecutive month, according to NAR. A recent survey from the group showed that the annual share of first time buyers in the last year was 33 percent, well below the long-run historical average of 40 percent and the lowest share in decades.