Existing Home Sales Edge Up for 2nd Straight Month

Published by: Frank Galvano on 20th Nov 2014 | View all blogs by Frank Galvano
Existing Home Sales Edge Up for 2nd Straight Month
 
The National Association of Realtors reported Thursday that existing home sales jumped for a second straight month in October to their fastest pace in 13 months.  According to the report, sales of pre-owned homes climbed 1.5 percent in October to a seasonally adjusted annualized rate of 5.26 million units.  That marks the fastest pace since September 2013, and marks the first year-over-year improvement in sales pace since last October.  The NAR also upwardly revised its estimate for September's sales pace to a 5.18 million unit clip.  Thursday's report encouraged economists already buoyed by low interest rates and an improving job market, prompting many to forecast year-over-year sales increases in the coming months.
 
The NAR's existing home sales report tracks sales of all single-family homes, townhomes, condominiums and co-ops.  Since the housing sector crashed in 2008, the group has also tracked the percentage of all sales accounted for by distressed properties, or foreclosures and short sales.  Last October, these distressed sales accounted for 14 percent of all sales, bu that figure was only 9 percent for last month.  This marks the third straight month in which distressed properties made up less than 10 percent of sales, a streak not seen since the NAR began tracking the data.  Distressed properties typically sell for steep discounts when compared with traditional sales, as illustrated by the NAR's report.  The group noted that foreclosures sold for an average discount of 15 percent below market value in October, while short sales sold for an average of 10 percent off.

 
Thursday's report also showed an increase in the number of all-cash buyers, as such transactions rose from 24 percent of all transactions in September to 27 percent.  In August, all-cash buyers accounted for 23 percent of all sales, the lowest share since December 2009.  The number of investors active in the housing market has been in decline in recent months as the number of distressed properties has dried up.  Total inventory of existing homes on the market fell 2.6 percent in October to a total of 2.22 million homes.  At the current pace, that total represents a 5.1 months supply, or the shortest supply since March.  Economists view a supply of six months as being representative of a healthy housing market.

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