People wait to visit a home for sale in Floral Park, Nassau County, New York.
Wang Ying | Xinhua News Agency | Getty Images
The strong pandemic-driven housing demand is still there, but buyers may now be reaching an affordable limit.
Home sales outstanding decreased 1.1% month on month in October but were 20.2% higher compared to October 2019. This value is a measure of the signed contracts for existing houses and thus a future indicator of completed sales.
It is therefore also a more recent read on buyer activity as it depicts people shopping and making purchasing decisions during the month. Analysts expected a small monthly profit.
“The real estate market is still hot, but rising house prices may hurt affordability,” said Lawrence Yun, chief economist for the National Association of Realtors, in a press release.
Mortgage rates hovered near historic lows over the course of the month, but the supply of houses for sale also hit another historic low. The number of properties for sale at the end of October fell by almost 20% annually and, at the current rate of sale, only corresponded to a supply of 2.7 months. A six month delivery is considered a balanced market between buyer and seller.
The growing imbalance has led to bidding wars, causing the average price of an existing home to rise to its all-time high in October, according to brokers. At $ 313,000, it’s up 16% annually. The offer is particularly at the lower end of the market.
“The combination of these factors – housing scarcity and low interest rates – plus very strong demand, have brought home prices to levels that make it difficult to save for a down payment, especially for first-time buyers who don’t have the luxury of home ownership a sale as a deposit, “said Yun.
The upcoming house sales were regionally mixed. In the northeast, they fell 5.9% over the month, but rose 18.5% year over year. In the Midwest, sales fell 0.7% a month, but rose 19.6% annually.
Home sales in the south rose 0.1% from September and 21.0% from October 2019. Sales in the west were flat month-over-month, up 20.8% year over year.
Due to the low supply of existing houses, the sale of newly built houses benefited. According to the US census, they were up more than 40% from October 2019. However, builders now face the same problem as the existing market. Supply has fallen far and the number of homes sold that have not yet been commissioned has increased over 90% annually.