MNI DATA IMPACT: US October Home Sales Fastest Since 2006

U.S. existing home sales set the fastest pace since 2006 in October while the lowest inventories since 1982 pushed prices to a fresh record high, the National Association of Realtors said Thursday.

Sales climbed 4.3% to a seasonally adjusted annual rate of 6.85 million and have topped pre-pandemic levels, NAR chief economist Lawrence Yun told reporters Thursday. The national median home price reached another all-time high in October of USD313,000, 16% higher than last year.

"Sales are booming," Yun said, which is "quite remarkable" given the Covid-19 pandemic's renewed strength and millions still without work. Sales are now up 27% from a year earlier, around the time unemployment touched the half-century low of 3.5%.

The gains suggest a "complete shift in the U.S. economy" where new flexibility allows many employees to work from almost anywhere, he said, leading many to create in-home offices.

PRICIER HOMES LEAD GAINS

The gap between condominium and single family sales still narrowed in October, likely because home buyers have a better understanding of social distancing and other public health mandates, Yun said, and buyers may be coming back to cities after fleeing to the suburbs.

Single family home sales were up 4.1% in October, while condo sales rose 5.8%.

Sales rose in all four major geographic regions in October: up 8.6% in the Midwest; 4.7% in the Northeast; 3.2% in the South; and up 1.4% in the West. From a year earlier, sales in each region increased roughly 30%.

Homes on the upper end are "flying," Yun said, while sales growth in the lower-end market suffers from inventory constraints. That's pushing the median price higher, he said.

INVENTORY SQUEEZE

Existing homes priced under USD100,000 saw 22% fewer transactions in October from year-ago levels, according to NAR. Meanwhile, sales of homes between USD750,000 and USD1 million were up 80% year-over-year.

Roughly 1.42 million homes were available for sales at the end of October, down nearly 20% from a year ago. At the current sales pace, it would take 2.5 months to exhaust that inventory, the lowest month's supply in records dating back to 1982.

"We need to build more," Yun said. More inventory would slow monthly price gains and prevent buyers on the lower end from being priced out of an increasingly competitive market, he said.