Flight from the Cities: Existing Home Sales Unexpectedly Soar, Hit Highest Level Since 2006

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U.S. home sales increased for a fifth straight month in October, far exceeding expectations and hitting the fastest pace of sales in 14 years.

Sales of existing homes in October soared 4.3 percent compared with September and 26.6  percent annually to a seasonally adjusted annualized rate of 6.85 million units, according to data released Thursday by the National Association of Realtors.

Economists expected a decline of 1.2 percent to 6.45 million from 6.54 million initially reported for September. That blistering 9.4 percent monthly gain was seen as unsustainable and high prices were seen as hurting sales volume. But growth continued and last month’s figure was revised up to a 6.57 million sales pace, a 9.9 percent sales gain.

“The surge in sales in recent months has now offset the spring market losses,” said Lawrence Yun, the NAR’s chief economist. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.”

Yun forecasts existing-home sales to rise by 10 percent to 6 million in 2021.

Existing home sales are recorded at closing and reflect contracts signed in August and September.

The annualized sales rate is the highest since February 2006. The record high was 7.1 million units hit in 2005.

A broad range of factors—from looting and rising murder rates to closed schools to working from home and lockdowns of urban amenities such as museums, theaters, and restaurants—has pressed Americans to speed up purchasing plans and pushed renters to decide to become home buyers.

“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” Yun said.

The additional demand is causing a surge in home prices. The median existing-home price for all housing types in October was $313,6000, up 15.5 percent from last year. The median existing single-family home price was $317,700 in October, up 16.0 percent from October 2019.

Median home prices increased at double-digit rates in each of the four major regions from one year ago.

  • Northeast sales rose 4.7 percent, recording an annual rate of 900,000, a 30.4 percent increase from a year ago. The median price in the Northeast was $356,500, up 20.2 percent from October 2019.
  • Midwest sales climbed 8.6 percent to an annual rate of 1,640,000 in October, up 28.1 percent from a year ago. The median price in the Midwest was $243,500, a 16.7 percent increase from October 2019.
  • Sales in the South increased 3.2 percent to an annual rate of 2.91 million in October, up 26.5 percent from the same time one year ago. The median price in the South was $272,500, a 15.7 percent increase from a year ago.
  • Sales in the West inched up 1.4 percent to an annual rate of 1,400,000 in October, a 22.8 percent increase from a year ago. The median price in the West was $467,800, up 15.1 percent from October 2019.

The supply of homes is increasingly limited. Total housing inventory at the end of October totaled 1.42 million units, down 2.7 percent from September and down 19.8 percent from one year ago. Unsold inventory sits at an all-time low 2.5-month supply at the current sales pace, down from 2.7 months in September and down from the 3.9-month figure recorded in October 2019.

 

 

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