October 2017 Existing Homes Sales

Sales of existing homes jumped 2.0 percent in October according to the National Association of Realtors.  Increasing 110,000 units to 5.48 million on a seasonally adjusted annualized basis, this monthly uptick is the best since May of this year.  However, the year-over-year statistic remained negative (down 0.9 percent) for a second consecutive month.

Prices helped transaction volumes.  Both central tendencies included in the report were weaker for the fourth consecutive month.  An average priced home declined to $288,400, falling $800.00 versus September.  The median-priced home declined marginally as well, falling $600 to $247,000.

Regional data were strong across the country.  Midwest sales improved the least, up 0.8 percent.  Volumes in the largest region, the South, rose 1.9 percent.  Transactions in the West jumped 2.4 percent, and Northeast sales soared 4.2 percent.

Interest reached the highest level since June.  According to Freddie Mac, the average commitment rate for a 30-year conventional, fixed-rate mortgage rose to 3.9 percent from 3.81 percent in September.  During 2016, the average commitment rate was 3.65 percent.

Inventory continues to be tight by historic standards.  There were 3.2 percent fewer homes on the market, falling to just 1.8 million or 10.4 percent lower than twelve months earlier.  This year-ago tally has dropped for 29 consecutive periods.  On a sales basis, there are just 3.9 months of supply; since June, this figure held steady at 4.2 months.

Housing continues its uptrend, but headline figures might belie reality.  Atlas doesn’t claim to know what is driving the market’s behavior, but inventory data does not seem appropriate.  Something is keeping homeowners from putting up for-sale signs.  This segment of the economy has been supported by low borrowing costs, yet owners, even with today's elevated prices, are reluctant to part with their current abodes.  One day the cause of the inventory issue might seem obvious; today it isn’t so clear.