According to the National Association of Realtors, October showed an improvement in existing home sales while the inventory of homes on the market continued to decline.
Total existing-home sales, which are defined as completed transactions that include single-family, townhomes, condominiums and co-ops, rose 1.4 percent to a seasonally adjusted annual rate of 4.97 million in October from a downwardly revised 4.90 million in September, and are 13.5 percent above the 4.38 million unit level in October 2010.
NAR chief economist, Lawrence Yun said that although it is at a lower than desired level, the market has been fairly steady. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents and high affordability conditions. Many people who are attempting to buy homes are thwarted in the process,” he said.
“A higher rate of contract failures has held back a sales recovery. Contract failures reported by NAR members jumped to 33 percent in October from 18 percent in September, and were only 8 percent a year ago, so we should be seeing stronger sales,” Yun added.
Contract failures can be defined as cancellations of contracts caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.
The issue definitely is not lack of good rates, as according to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.07 percent in October from 4.11 percent in September; the rate was 4.23 percent in October 2010.
On a positive note there has been a steady decline in the number of homes on the market. Total housing inventory at the end of October fell 2.2 percent to 3.33 million existing homes available for sale, which represents an 8.0-month supply3 at the current sales pace, down from an 8.3-month supply in September.
Evidence that we are still seeing prices decline nationally is witnessed in the fact that the national median existing-home price for all housing types was $162,500 in October, which is 4.7 percent below October 2010. The major reason for this decline is the sale of distressed property. Foreclosures and short sales typically sold at deep discounts.
All-cash sales accounted for 29 percent of purchases in October, little changed from 30 percent in September and 29 percent in October 2010; investors make up the bulk of cash transactions.
Most of us, with good reason want to know the specific numbers on single family home sales. The good news is that single-family home sales increased 1.6 percent to a seasonally adjusted annual rate of 4.38 million in October from 4.31 million in September, and are 13.8 percent higher than the 3.85 million-unit pace one year ago. The not so good news is that the median existing single-family home price was $161,600 in October, which is 5.8% below October 2010.
Although the national figures look bleak, they are less troubling when you look at our region. In the South, existing-home sales increased 2.1 percent to an annual level of 1.94 million in October and are 14.1 percent above a year ago. The median price in the South was $145,700, down 1.6 percent from October 2010.