Existing-Home Sales Decline
Data from the National Association of Realtors® (NAR) reveals that sales of existing homes in October have declined for the second straight month, while home prices continue to see double-digit year-over-year gains due primarily to “constrained inventory.”
Sales figures for existing-homes are released by the NAR on the 20th of each month, so data for November sales will be released later this month. The NAR states that total existing-home sales figures denote completed transactions that include single-family homes, townhomes, condominiums and co-ops.
According to NAR data total sales fell 3.2 percent to a seasonally adjusted annual rate of 5.12 million units for October, down from 5.29 million in September. Though a decline for the second month in a row, total existing-home sales are 6.0 percent higher than the 4.83 million-unit level in October of 2012. Sales have remained above year-ago levels for the past 28 months.
NAR chief economist, Lawrence Yun, indicated that a slowdown could be occurring when he said. “The erosion in buying power is dampening home sales,” he said. “Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains.”
A partial breakdown of the sales figures show that distressed homes, which includes foreclosures and short sales, accounted for 14 percent of sales in October, which was unchanged from September, while they totaled 25 percent in October 2012. Additionally, “Nine percent of October sales were foreclosures, and 5 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in October, while short sales were discounted 14 percent.”
Gains in the median price of existing-homes were partially credited due to the smaller share of distressed sales. The NAR says that the national median existing-home price for all housing types was $199,500 in October; this was up 12.8 percent from October 2012. The median price increase is the 11th consecutive month of double-digit year-over-year increases.