Despite the devastation Hurricane Sandy wrought on the Northeast and Mid-Atlantic states, data released by the National Association of Realtors on Monday showed that the housing market is continuing to recover.
In the month of October, the sales of existing homes in the United States rose 2.1 percent to a seasonally adjusted 4.79 million, an increase from 4.69 million in September. When compared year-over-year, existing home sales rose 10.9 percent from the 4.32 million-unit level in October 2011.
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While existing-home sales are far from matching their 7 million-unit level recorded in 2005, sales have recovered from the July 2010 low of 3.3 million. However, even though sales results for the month were strong, they missed analysts’ expectations. Economists polled by MarketWatch had expected 4.8 million.
NAR data also showed that housing prices rose during the month, due to lower levels of inventory supply. By the end of October, total housing inventory fell 1.4 percent to 2.14 million homes available for sale. At the current sales pace, this represents a 5.4-month supply, which is a decrease from the 5.6-month supply recorded in September and the lowest housing supply figure since February 2006 when it was 5.2 months.
Comparatively, the average home price in 20 major cities increased 0.9 percent in August, according to the most recent figures from the S&P/Case-Shiller home price index, and the national average existing-home price was $178,000 in the month of October.
As further proof that the housing market is improving, home equity has grown by $760 billion in the past year, spurred by the increasing existing-home sales. “Given that each percentage point of price appreciation translates into an additional $190 billion in home equity,” NAR chief economist Lawrence Yu said in the report, “we could see close to a $1 trillion gain next year.”
Record-low interests rates also drove sales figures higher. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low of 3.38 percent in October, down from 4.07 percent last October.
The effects of Sandy were not immediately obvious in the reports raw data, but Yu said “We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions.”
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