Implications: Existing home sales finally rose in October following six consecutive months of declines. While the hurricane season shifted the timing of activity over recent months, we are now moving towards a more "normal" environment, and the months ahead will give us a clearer picture of housing market health. That said, the biggest problem for existing home sales has been a lack of supply. The months' supply of existing homes – how long it would take to sell the current inventory at the most recent sales pace – declined to 4.3 months in October and has been below 5.0 since late 2015 - the level the National Association of Realtors (NAR) considers tight. The good news is that inventories may finally be turning a corner, rising on a year-over-year basis for the third month in a row after 38 straight months of stagnation and declines. If sellers really are changing their behavior, a reversal in the steady decline of listings we've seen since mid-2015 would be a welcome reprieve for buyers, boosting supply and sales, as well. Even with the current lack of choices, the demand for existing homes has remained remarkably strong, with 46% of homes sold in October remaining on the market for less than a month. Higher demand and a shift in the "mix" of homes sold toward more expensive properties has also driven up the median sales price, which is up 3.8% from a year ago. Many analysts are suggesting rising mortgage rates are signaling the end for the housing market recovery. However, continued strength in the job market, rising wages, and a turnaround in housing inventory should offset higher financing headwinds going forward. It won't be a straight line higher, but any fears that the housing recovery is over are overblown.
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