Existing Home Sales Decline in October But Market Fundamentals Still Strong
Total sales of single-family homes, townhouses, condominiums and co-ops jumped 4.7 percent from August to September, but then cooled off from September to October and declined 3.4 percent.
Existing home sales were brisk in October, but not enough to match or beat September's huge climb. As a result, sales dropped 3.4 percent month-over-month, the National Association of Realtors said.
Mortgage rates have stayed below 4 percent for the fourth straight month, and that's one the reasons interest in the housing market has been strong of late, said Lawrence Yun, chief economist for the NAR.
That helped keep demand at a fairly high level in October, but the lack of available homes dampened what otherwise should have been much better monthly numbers.
"New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets," Yun said.
"Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales," he added.
October's setback comes on the heels of a 4.7 percent jump in sales from August to September.
Total sales -- including single-family homes, townhomes, condominiums and co-ops -- fell to 5.36 million units in October from 5.55 million units in September.
Despite the month-over-month decline, sales are still 3.9 percent higher compared to October 2014, when 5.16 million units were sold.
The median price for all housing types in October was $219,600, a 5.8 percent increase compared to the same month in 2014. The NAR said the October price hike is the 44th consecutive month of year-over-year gains.
"As long as solid job creation continues, a gradual easing of credit standards, even with moderately higher mortgage rates, should support steady demand and sales continuing to rise above a year ago," Yun said.
Separately, 4.93 million single-family homes were sold in September, and 4.75 million units changed hands in October, representing a drop of 3.7 percent. But sales are still 4.6 percent above the 4.54 million units of a year ago.
The median price for an existing single-family home price was $221,200 in October, up 6.3 percent from the same month a year ago.
Existing condominium and co-op sales dropped 1.6 percent to 610,000 units in October, from 620,000 units in September. Sales in this housing segment are also down 1.6 percent compared to the same month in 2014.
The median price for a condominium was $207,100 in October, an increase of 1.6 percent from a year earlier.
• Midwest -- existing-home sales declined 0.8 percent in October, compared to September, but are 8.3 percent higher than a year ago.
• Northeast -- sales were unchanged month-over-month, and have increased 8.6 percent compared to October 2014.
• South -- existing-home sales decreased 3.2 percent in October, but are still 0.5 percent above results from a year earlier.
• West -- sales fell 8.7 percent month-over-month, but are still 2.7 percent above a year ago.
MPI Above 50 for 15 Straight Quarters
The multifamily housing industry is alive and well, as the third quarter of 2015 marks the 15th straight three-month period the Multifamily Production Index has been above its mid-range level of 50.
The third-quarter MPI increased one point to 56, the National Association of Home Builders said.
Each MPI measures builder and developer sentiment about current conditions in the apartment and condominium market using a scale of 0 to 100. Any number above 50 indicates that more respondents view conditions as improving. Conversely, any number below 50 points to worsening conditions.
Key elements of the MPI are construction of low-rent units, market-rate rental units and "for-sale" units, or condominiums. The low-rent units' component increased one point to 55, while market-rate rental units rose four points to 64. For-sale units dropped three points to 50.
"The consistent MPI reading over 50 aligns with the fact that the multifamily market has recovered and will continue to do well," said David Crowe, chief economist for the NAHB. "This positive growth is due in part to a strengthening labor market, which has enabled millennials to find jobs and create their own households."