US housing sales rose slightly in October, while prices continued to rise

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Sales of existing homes, including single-family homes, townhouses, apartments and co-ops, increased by 0.8% from the previous month. After the summer slowdown, sales reignited in September, Increased by 7% every month.

Compared with the same period last year, home sales fell by 5.8% from October 2020, which marked the cyclical peak of the surge in home purchases during the pandemic.

NAR chief economist Lawrence Yun (Lawrence Yun) said that this year’s sales are expected to exceed 6 million sets, which will be the strongest performance since 2006.

“Despite low inventory and increasing affordability challenges, home sales remain resilient,” Yun said. “Inflationary pressures, such as rapidly rising rents and rising consumer prices, may cause some potential buyers to seek the protection of fixed, consistent mortgage payments.”

Nonetheless, the shortage of available-for-sale homes continues to push up housing prices, making it more difficult for first-time home buyers and low-income buyers to afford homes.

The median price of existing homes for all housing types in October was $353,900, an increase of 13% from a year ago. This marks 116 consecutive months-or more than nine and a half years-year-on-year growth, which is the longest continuous growth on record.

Inventory is still tight

Inventory shortages continue to put heavy pressure on the real estate market, and it does not seem to ease soon.

According to NAR reports, there were 1.25 million homes for sale at the end of October, down 12% year-on-year, slightly lower than in September.

At the current sales rate, the market has 2.4 months of housing supply. Usually, a balanced market has about 6 months of housing supply.

“Although housing competition has eased since the frenzy earlier this year, competition remains fierce and prices are still rising at a double-digit rate,” said Robert Frick, a corporate economist at the Navy Federal Credit Union.

Frick said rising house prices make the situation for low-income buyers particularly difficult because there is more inventory available in the high-end market.

In October, sales of homes priced between US$250,000 and US$500,000 fell by 2% from a year ago because the number of homes was insufficient to meet demand. At the same time, sales of homes priced between US$500,000 and US$750,000 increased by 18% year-on-year, while sales of homes priced over US$1 million increased by 31%.

Joel Kan, vice president of economics and industry forecasts, said this highlights the need to put more homes (existing homeowners and newly built homes) on the market to supplement and replenish the country’s aging housing stock. Mortgage Bankers Association.

There are more investors and cash in the market

Another factor leading to price increases: More and more people are buying houses with cash, which is a common move for buyers looking for investment properties for rent or vacation homes.

According to the NAR report, nearly a quarter of the houses purchased in October were all-cash transactions. This is an increase from 19% a year ago. Homes purchased as vacation homes or investment properties accounted for 17% of homes purchased in October, up from 14% a year ago.

“In some workforces, there is a continuing trend of flexibility to work anywhere, which helps increase sales in certain areas of the country,” Yun said. “The record-breaking stock market and the highest house prices in history have significantly increased the total wealth of consumers. Coupled with the flexibility of remote work, it has increased the demand for housing in resorts.”

Due to this increase in financial strength, home buyers and first-time home buyers who finance their home purchases through mortgages continue to strive to compete in the market. First-time home buyers accounted for only 29% of sales in October, down from 32% a year ago.

“Any buyers competing to buy mortgage loans, especially if they have FHA, VA mortgage loans, these mortgage loans involve more evaluation process, may find it difficult to compete with all the cash,” Yun said.

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