Existing homes sales cooled in October

Existing homes sales cooled in October
© Getty Images

Sales of previously owned homes maintained a healthy pace but cooled in October.

Total existing-home sales, which are completed transactions that include single-family homes and condominiums, fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September, the National Association of Realtors said Monday.

ADVERTISEMENT

Despite last month’s decline, sales are 3.9 percent above a year ago.

“New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” said Lawrence Yun, NAR chief economist.

“Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales," Yun said.

Housing inventory at the end of October decreased 2.3 percent to 2.14 million existing homes available for sale, and is now 4.5 percent lower than a year ago (2.24 million).

The number of homes for sale last month represented a 4.8-month supply at the current sales pace, up from 4.7 months in September.

But continued job creation and more credit availability should help boost sales into next year, Yun said.

Mortgage rates held below 4 percent for the third straight month — the average rate for a 30-year, fixed-rate mortgage fell in October to 3.80 from 3.89 percent in September. A year ago, the average commitment rate was 4.04 percent, according to Freddie Mac.

Home prices have continued to increase but at a slower pace.

The median existing-home price in October was $219,600, which is 5.8 percent above October 2014 ($207,500). October’s price increase was the 44th consecutive month of year-over-year gains.

The percentage of first-time buyers increased to 31 percent in October, up from 29 percent in September.

But the annual share of first-time buyers fell to its second-lowest level since the survey began in 1981, according to a separate NAR report.

All-cash sales were 24 percent of transactions in October, unchanged from September, and are down from 27 percent a year ago.

Individual investors, who account for most cash sales, purchased 13 percent of homes last month, unchanged from September.

Distressed sales — foreclosures and short sales — declined to 6 percent in October, which is the lowest since NAR began tracking in October 2008. They were 9 percent a year ago.

“All-cash and investor sales are still somewhat elevated historically despite the diminishing number of distressed properties,” Yun said.

“With supply already meager at the lower-end of the price range, competition from these buyers only adds to the list of obstacles in the path for first-time buyers trying to reach the market.”

Single-family home sales fell 3.7 percent in October while existing condo sales slipped 1.6 percent.

Regionally, none of the four areas saw any gains in October.

Sales in the Northeast were unchanged, the Midwest posted a 0.8 percent sales decline, the South's sales fell 3.2 percent and the West's dropped 8.7 percent.