Existing home sales explode, up 27% from last year

Existing home sales have risen for the fifth consecutive month as the housing industry continues to show its resilience in the face of the COVID-19 pandemic.

The National Association of Realtors reported Thursday that homes sales are up an astonishing 27% from the same time one year ago. In addition, it was reported this week that single-family home construction rose by its fastest pace since spring 2007, as buyers increase their interest in newly built homes.

At the same time, buyers are having to deal with higher prices, and sales are happening very quickly. Median existing-home prices went up again last month and are now up almost 16% from the same time last year, to $313,000, the NAR said.

“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector performed remarkably well this year,” said NAR Chief Economist Lawrence Yun.

Existing home sales refer to completed transactions that include single-family homes, townhomes, condos and co-ops, and hit a seasonally adjusted annual rate of 6.85 million in October, up 43% from September. Meanwhile, the inventory of homes listed for sale dropped again, and is now down almost 20% from what it was one year ago, at just 1.42 million. According to the NAR, that’s just a 2.5 month supply of homes at the current sales pace, a record low since it began recording such data.

Homes listed on the market are selling extremely quickly too, with 72% of homes that sold in October having been on the market for under a month.

“The surge in sales in recent months has now offset the spring market losses,” Yun said. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.”

Yun forecast that existing-home sales will increase by around 10% to 6 million in the next year.

Meanwhile, the Commerce Department said home builders are also enjoying the fruits of the pent up buyer demand. On Wednesday it reported that single-family construction had risen by 6.4% in October compared to September, to a seasonally adjusted annual rate of 1.18 million new homes, up 8.6% from a year ago.

The most single-family and multifamily starts occurred in the Midwest region, growing by 15.5% year over year, with gains of 7.5% in the South and 4.7% in the West. The Northeast region saw new home starts decline by 6.4%, however.

“Faced with many uncertainties in 2020, the real estate industry has been able to meet surprisingly strong home buying demand and help lead our country’s economic recovery,” NAR President Charlie Oppler said. “As we continue to help consumers secure housing and property, we will also remain vigilant in working to expand housing options, equality, and affordability for all who are entering the marketplace.”