Last month sales of existing homes in the US declined for the second consecutive month, but the lack of inventory means year on year price gains are still in the double digits.
In October the seasonally adjusted rate of home sales fell to 5.12 million, down from 5.29 million in September which is a fall of 3.2%. However this rate is still 6% higher than the levels seen in October last year when the seasonally adjusted rate for existing home sales was 4.83 million. According to the article in Propertywire, a decline in buying power is leading to a fall in home sales. Furthermore the lack of inventory is pushing up prices in most parts of the United States. Experts have pointed out that new home construction is needed to help relieve this pressure and to moderate price gains.
In October the national median home price for existing housing was $199,500, an increase of 12.8% compared to October last year. This also marks the 11th consecutive month when year on year increases have reached double digits. Some 14% of home sales in October were due to foreclosures and short sales, a rate that remained unchanged from the previous month, and which is far below the 25% seen in October last year. As a result, the increase in median home prices is due at least in part to a declining level of distressed sales. When the figures for October were broken down, 5% were due to short sales while 9% were due to foreclosures. In October foreclosures sold for an average of 17% less than the market value while short sales were an average of 14% less.
By the end of last month the housing inventory had fallen by 1.8%, and there were 2.13 million existing homes for sale. At the current rate of sales this would mean there is a five month supply. In comparison a year ago there was a 5.2 month supply. The average time a home spent on the market in October was 54 days, a slight increase on the 50 days in September, but far less than in October 2012 when the average property spent 71 days on the market. Foreclosures are typically sold within 46 days, while short sales took an average of 93 days. In October, 36% of homes sold has been on the market for less than a month.
Some experts feel that credit conditions are still restrictive, even though rates are still historically affordable. In October first-time buyers accounted for 28% of home sales, a rate that is unchanged compared to September, but which has declined since October last year when it reached 31%.