By KEN SWEET AP Business Writer
Sales of existing homes rose for a fifth straight month in October, reaching a level not seen since before the housing bubble popped 14 years ago.
The National Association of Realtors said Thursday existing homes sales rose 4.3% to a seasonally-adjusted rate of 6.85 million annualized units. Reflecting the searing-hot housing market, that figure is up 26.6% from a year earlier.
The 6.85 million figure is the highest for that data since February 2006 — the eve of when the housing market reached its apex and subsequently collapsed.
Realtors and housing market experts have said the housing market is in a different and healthier place than it was the last time sales were at these levels. With interest rates at near-record lows, mortgage rates have dropped to historically low levels. Also the pandemic has caused many families to seek out different living arrangements to reflect that many people are likely to work remotely for the foreseeable future.
“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” said Lawrence Yun, NAR’s chief economist.
While coronavirus-induced shutdowns hindered virtually all markets, Yun says the housing industry has mounted an impressive rebound.
“The surge in sales in recent months has now offset the spring market losses,” he said. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” Yun forecasts existing-home sales to rise by 10% to 6 million in 2021.
But the housing market is now heading into the winter months, and with resurgent cases of coronavirus nationwide, it is more likely that the housing market will take a pause in the coming months instead of rocketing even higher.
“We do expect the pace of sales to slow in the fourth quarter, with a weak recovery, resurgent pandemic and depleted inventories weighing on activity, although the risk may be for further upside surprises,” said Nancy Van Housten, lead U.S. economist for Oxford Economics
The median price of an existing home was $313,000, up 15.5% from a year earlier, mostly reflecting that the nationwide inventory of existing homes remains at or near record lows. The inventory of unsold homes sits at 2.5 months’ supply, down from 2.7 months’ supply in September.
Existing-home sales in the South increased 3.2% to an annual rate of 2.91 million in October, up 26.5% from the same time one year ago. The median price in the South was $272,500, a 15.7% increase from a year ago. – FWBP Staff contributed to this report.