Home sales rose at a much slower pace in October.
Existing home sales rose 0.8% to a seasonally adjusted 6.34 million units in October from a month earlier, according to the National Association of Realtors (NAR). The results were better than analysts' expectations of a 1.8% decline, according to Bloomberg consensus estimates.
"The housing market remains strong, resilient," said Lawrence Yun, NAR chief economist, in a press conference announcing the results, attributing the strength in the market to "continued strong job additions, low interest rates in August, September."
He added: "The stock market being at all time highs is also helping and investors are beginning to come in higher than normal, attracted by recent rent increases."
In fact, investors represented 17% of transactions last month, while first-time homebuyers made up 29% of deals, down from 32% the same time a year ago.
“Among some of the workforce, there is an ongoing trend of flexibility to work anywhere, and this has contributed to an increase in sales in some parts of the country,” said Yun.
Regionally home sales were mixed. In the Northeast, sales fell 2.6%, in the Midwest (where homes are most affordable) sales increased 4.2% and in the South (where migration occurred) sales increased 0.4% in October.
Year-to-date existing home sales are up 11% from the same time a year ago and up 13% from 2019 (pre-COVID-19), according to the NAR. Yun said based on the current sales pace, existing home sales transactions are on track to reach, if not surpass, 6 million units — the best performance in 15 years.
"Another upside surprise relative to both the mortgage applications numbers and the pending sales index, leaving sales at a nine-month high, after reversing about three-fifths of the drop in the first half of the year," said Pantheon Macro U.S. in a statement after the results. "The proportion of cash buyers has jumped over the past year, to 24% from 19%, while the proportion of investors has climbed to 17% from 14%; this likely explains the overshoot relative to mortgage applications. For mortgaged buyers, the rebound in sales has been supported by lower rates since their spring peak, and a clear easing in lending standards."
The median existing-home price for all housing types in October was $353,900, up 13.1% from October 2020 ($313,000), as prices climbed in each region. This marks 116 straight months of year-over-year increases, the longest-running streak on record.
Total housing inventory at the end of October hit 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September’s supply, and down from 2.5 months in October 2020. Days that homes remain on the market "remain swift" at 18 days, but the pace is losing steam, according to Yun, noting that in September homes were on the market for 17 days.
“Inventory declined to 1.25 million homes for sale, reiterating the need for more for-sale units from both homeowners listing their homes for sale, and the construction of new homes, to supplement and replenish the country’s aging housing stock," said MBA AVP of Economic and Industry Forecasting Joel Kan, in a statement after the results. "The median sales price picked up again after three monthly declines and was 13% higher than a year ago. The housing market heading into 2022 is still feeling the effects of a persistent supply and demand imbalance.”
Amanda Fung is an editor at Yahoo Finance.