Steel Markets

Increase in October Home Sales Offset by Annual Decline

November 22, 2018

After six months of decline, existing-home sales showed some improvement in October. Completed transactions for single-family homes, condos, townhomes and co-ops increased 1.4 percent from September to a seasonally adjusted annual rate of 5.22 million, according to data from the National Association of Realtors.

The increase was tempered by a 5.1 percent drop in sales compared to a year ago, the largest annual decline since October 2014. The annual decline suggests that the housing sector will continue to soften in the coming months, said Lawrence Yun, NAR chief economist. “There is some feeling that the market could actually go even lower than what it is now in terms of sales,” Yun said.

Housing inventory declined from 1.88 million in September to 1.85 million existing homes available for sale at the end of October. At the current sales pace, inventory is at a 4.3-month supply, down from 4.4 months in September.

The median existing-home price rose 3.8 percent year-over-year to $255,400, with price gains noted in all four regions.

Existing home sales increased 1.5 percent in the Northeast, 1.9 percent in the South and 2.8 percent in the West. Sales in the Midwest slipped 0.8 percent last month.

Earlier this year, a shortage of inventory was blamed for slowing sales, but a series of Federal Reserve interest rates hikes have raised mortgage rates, adding to affordability issues.

“Rising interest rates and increasing home prices continue to suppress the rate of first-time homebuyers. Home sales could further decline before stabilizing. The Federal Reserve should, therefore, re-evaluate its monetary policy of tightening credit, especially in light of softening inflationary pressures, to help ease the financial burden on potential first-time buyers and assure a slump in the market causes no lasting damage to the economy,” said Yun.