By Peter Ricci
Existing-home sales rose 2.1 percent in October, according to the National Association of Realtors latest market report. Housing inventory, though, declined again in October, adding further pressure to home prices.
Existing-Home Sales Rise, Housing Inventory Levels Fall
Altogether, existing-home sales rose to an annual rate of 4.79 million in October, which is 10.9 percent above the 4.32-million mark in October 2011. Housing inventory, though, fell yet again, dropping 1.4 percent to 2.14 million units; that’s a 5.4-month supply, and the lowest level for housing inventory since February 2006 (and the lowest for October since 2001).
Other details from NAR’s report included:
- Such low inventory levels are putting strong pressure on existing-home price, which rose 11.1 percent from last year and has now risen year-over-year for eight straight months. Lawrence Yun, NAR’s chief economist, said the home price increases in 2012 have contributed to a $760 billion growth in home equity.
- Median time on the market was 71 days, but with a telling caveat – 32 percent of homes sold in October were listed for less than a month, while 20 percent had been listed for six months or longer; pricing matters!
- Interestingly, NAR’s data on distressed property sales contradicted recent findings from Zillow. Distressed homes, NAR found, accounted for 24 percent of October sales, and the discounts for short sales and foreclosures were a respective 14 and 20 percent; those numbers are noticeably higher from what Zillow reported last week.
Gary Thomas – Housing Affordability “Won’t Last Forever”
Gary Thomas, the president of NAR, said that even though low housing inventory levels are driving home prices higher, housing affordability will remain within homebuyers’ reach – but not indefinitely.
“Even with rising home prices, we’ll continue to see favorable housing affordability conditions over the coming year, but they won’t last forever,” Thomas said.
NAR has been drawing attention to the uneasy relationship between home-price increases and housing affordability in recent weeks, and it will be interesting to see how that relationship develops as housing continues to recover in 2013.