US existing-home sales hit 8-month high in October

[ATLANTA] Sales of previously owned homes in the US rose in October to the fastest pace in eight months, as buyers took advantage of lower mortgage rates and gained the upper hand over sellers in some markets.

Contract closings climbed 1.2 per cent to an annual rate of 4.1 million last month, according to National Association of Realtors (NAR) data released on Thursday (Nov 20). Economists surveyed by Bloomberg expected a rate of 4.08 million.

The median sales price gained 2.1 per cent from a year ago to US$415,200, extending a run of year-over-year price increases dating back to mid-2023.

The sales figures for October – when the federal government shut down – marked the second straight month of increases, and points to a housing market showing some signs of life after remaining stuck around four million, a historically low level, for most of the year.

The improvement was fuelled in part by a decline in borrowing costs, which dropped to the 6.3 per cent range in October, from nearly 7 per cent in May.

Sales were strongest among more expensive homes, particularly those costing US$750,000 or more.

“Home sales increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates,” NAR chief economist Lawrence Yun said.

In October, the supply of previously owned homes for sale fell 0.7 per cent to 1.52 million, still near its highest level since mid-2020, NAR data showed.

Homes remained on the market for 34 days, the longest stretch for any October since 2019, Yun said.

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A drop to a 5.8 or 5.9 per cent mortgage rate may make a bigger difference to get sales moving, he added.

But to get back to pre-Covid-19 levels, “it requires drastically larger supply”, he said. “We are not seeing that. And a much more meaningful decline in mortgage rates.”

Nationwide, sellers outnumbered buyers last month by about 500,000, giving the latter some power to demand discounts and other concessions, Redfin estimated in a separate report this month.

In the NAR report, sales in the South, the nation’s biggest home-selling region, increased 0.5 per cent, marking the strongest rate since February. Sales in the West fell 1.3 per cent, while sales were flat in the North-east. The Midwest led US regions with a 5.3 per cent sales gain.

First-time buyers accounted for 32 per cent of closings, up slightly from 30 per cent a month earlier.

The NAR will provide another look at the previously owned home market on Nov 25, when it releases October pending sales. Those are based on contract signings. BLOOMBERG