Print(November 23, 2009 Release)
Highlights
• Existing home sales rose 10.1 percent to an annualized pace of 6.10 million units in October from a month earlier. The annualized home sales in October is now 23.5 percent above its pace from a year ago.
• The three month average for existing home sales is 5.58 million annualized units.
• The Midwest, South, Northeast experienced increases of 14.4 percent, 12.8 percent, and 11.6 percent, respectively; while the West experienced an increase of only 1.3 percent.
• It was reported that 30 percent of home sales were foreclosure and short sales in October, up from 29 percent posted in September.
• The median home price declined 7.1 percent from a year ago.
• The months’ supply of homes available for sale dropped to 7.0 in October compared to 8.0 in September.
| Existing Home Sales (Mil, SAAR) | ||||
| Oct 09 | Sep 09 | 3 mo Avg | 1 year ago | |
| United States | 6.10 | 5.54 | 5.58 | 4.94 |
| % change | 10.1 | 8.8 | 23.5 | |
| Northeast | 1.06 | 0.95 | 0.97 | 0.83 |
| % change | 11.6 | 4.4 | 27.7 | |
| Midwest | 1.43 | 1.25 | 1.27 | 1.11 |
| % change | 14.4 | 9.7 | 28.8 | |
| South | 2.30 | 2.04 | 2.08 | 1.83 |
| % change | 12.8 | 7.9 | 25.7 | |
| West | 1.31 | 1.29 | 1.25 | 1.17 |
| % change | 1.6 | 12.2 | 12.0 | |
| Months’ Supply | 7.0 | 8.0 | 8.1 | 10.2 |
| Median Existing Home Prices (Ths, NSA) | ||||
| Oct 09 | Sep 09 | 3 mo Avg | 1 year ago | |
| United States | 173.1 | 176.0 | 175.5 | 186.4 |
| % change | -1.7 | 0.7 | -7.1 | |
| Northeast | 235.4 | 241.5 | 239.3 | 241.8 |
| % change | -2.5 | 1.3 | -10.5 | |
| Midwest | 146.6 | 147.2 | 153.9 | 145.0 |
| % change | -3.9 | -0.2 | 1.1 | |
| South | 151.1 | 153.5 | 153.9 | 161.2 |
| % change | -1.6 | -2.4 | -6.3 | |
| West | 220.2 | 223.7 | 221.2 | 258.1 |
| % change | -14.7 | 1.8 | -12.2 | |
Source: National Association of Realtors
Analysis
Existing home sales surged 10.1 percent in October to 6.1 million annualized units from a 5.54 million annualized pace in September according to a report issued by the National Association of Realtors. The October home sales pace was the strongest since February 2007. Existing home sales in October was 23.5 percent higher than the 4.94 million-unit pace posted in October 2008.
The median price of existing homes sold in October was $173,100, 7.1 percent less from a year earlier. October’s price drop was an improvement over the year over year 8.5 percent price drop in registered in September.
On the supply side, the inventory of existing homes available for sale dropped 3.7 percent to 3.574 million homes compared to a month earlier. As a result, the months’ supply plunged to 7.0 in October compared to an 8.0 months’ supply in September. The months’ supply measures the number of months it would take to deplete the entire inventory of existing homes at the current sales pace.
Regionally, the Midwest experienced the strongest gains in home sales followed by the South, Northeast and West. Existing home sales rose 14.4 percent in the Midwest compared to the previously month while sales in the South, Northeast and West rose by 12.7 percent, 11.6 percent and 1.6 percent, respectively.
According to the association, foreclosures sales comprised 30 percent of total sales in October compared to a 29 percent share of total sales posted in September.
The October home sales report was received enthusiastically by the housing markets and provides a counter to some recent disappointing reports on mortgage applications and new residential construction. Weekly mortgage application activity to purchase homes had plummeted over the past month, while new residential construction activity (housing starts) fell substantially in October. The surge in existing home sales over the past two months suggests that recent below par housing reports are likely temporary.
The recent vigor in existing home sales can be primarily attributed to households rushing to purchase homes to take advantage of a first-time homebuyer tax credit which was supposed to expire at the end of November. Recently Congress and President Obama agreed to extend the tax credit by another seven months and also expanded the tax credit to include homeowners and raised eligibility household income requirements.
With the fear of an expiring tax credit eliminated, we expect the pace of home sales to slow from the tax credit-induced frenzy of the past two months. However, the new expanded tax credit, effective until April 30, 2010, is likely to keep the housing recovery alive.
Our fear is that once the tax credit is finally (permanently) lifted in mid-2010, the housing recovery could stumble. However, it is possible that some of today’s negative influences, like monthly job losses and falling home prices, would improve by then and exert a positive influence on housing activity, keeping the recovery on track.
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