October Existing Home Sales

Sales of existing homes improved to the highest reading of the year in October, but the rate of improvement decelerated according to the National Association of Realtors.  After growing by 2.6 percent in September, the most recent data show an increase of only 1.5 percent on a month-over-month basis.  Growing by 2.5 percent on a year-ago basis, the seasonally adjusted annualized rate of sales was 5.26 million units in the period.

Other data within the report were mixed.  Interest rates (reaching the lowest level since June 2013) were even more supportive in the period as the average commitment rate for a 30-year conventional, fixed-rate mortgage fell to 4.03 in October from 4.16 in September according to Freddie Mac.  Inventories dropped 2.6 percent to 2.22 million homes for sale.  At the current pace of sales, this inventory would be depleted in 5.1 months.  Price measures fell for the fourth consecutive month.  The average price of an existing home dropped $200 to $254,800 while the median price lost $800 for a total of $208,300.

The NAR released a separate report in the month of November which explored first-time buyers and their representation within existing home sales.  The study revealed the annual share of first-time buyers fell to its lowest level in nearly three decades.  The long-term average, which dates back to 1981, shows that first-time buyers traditionally represent 40 percent of the existing home purchasers; however, they made up less than 30 percent of transactions for the 18th time out of the last 19 months in October.  Like many indicators Atlas follows, existing home sales are demonstrating evidence that post financial crisis recoveries are different than typical business cycle recoveries.       (by C. Cox)