Existing homes sales rose in October

Existing home sales increased in October despite Hurricane Sandy, another sign that the housing market's improvement is rooting. 

Sales, which are completed transactions that include single-family homes, townhouses, condominiums and co-ops, rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September, the National Association of Realtors (NAR) reported Monday. 

They are 10.9 percent above the 4.32 million-unit level a year ago. 

"Home sales continue to trend up and most October transactions were completed by the time the storm hit, but the growing demand with limited inventory is pressuring home prices in much of the country," said Lawrence Yun, NAR's chief economist.

NAR expects some delays in Northeastern home sales in the coming months from the storm. 

"Rising home prices have already resulted in a $760 billion growth in home equity during the past year," Yun said. 

With continued growth in the housing market, those gains could hit $1 trillion next year.

The national median existing-home price for all housing types was $178,600 in October, which is 11.1 percent above a year ago, the eighth consecutive monthly year-over-year increases. 

That last time that happened was from October 2005 to May 2006.

Distressed homes, foreclosures and short sales sold at deep discounts, accounting for 24 percent of October sales, unchanged from September.

Foreclosures sold for an average discount of 20 percent below market value in October, while short sales cost 14 percent less.

Total housing inventory at the end of October fell 1.4 percent to 2.14 million existing homes available for sale, which represents a 5.4-month supply at the current sales pace. Listed inventory is 21.9 percent below a year ago when there was a 7.6-month supply.

That is down from 5.6 months in September and is the lowest housing supply since February 2006 when it was 5.2 months. 

Meanwhile, mortgage rates are making housing purchases more affordable even as inventory shrinks. 

The rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.38 percent in October from 3.47 percent in September, according to Freddie Mac. 

"Even with rising home prices, we'll continue to see favorable housing affordability conditions over the coming year, but they won't last forever," said NAR President Gary Thomas.

Homes that are on the market are selling quickly with 32 percent on the market for less than a month in October, while 20 percent were on the market for six months or longer.

First-time buyers accounted for 31 percent of purchases in October, compared with 32 percent in September.

All-cash sales, usually made by investors, were at 29 percent of transactions in October, up slightly from 28 percent in September.

Investors, who account for most cash sales, purchased 20 percent of homes in October, up from 18 percent in September; they were 18 percent in October 2011.

Single-family home sales rose 1.9 percent to a seasonally adjusted annual rate of 4.22 million in October from 4.14 million in September, and are 9.6 percent above the 3.85 million-unit pace in October 2011. 

The median existing single-family home price was $178,700 in October, which is 10.9 percent higher than a year ago.

Existing condominium and co-op sales rose 3.6 percent to a seasonally adjusted annual rate of 570,000 in October from 550,000 in September, and are 21.3 percent above the 470,000-unit level a year ago. 

Regionally, sales in the Northeast fell by 1.7 percent and rose in the other three regions, up 2.1 percent in the South, 1.8 percent in the Midwest and 4.4 percent in the West.