Implications: Existing home sales continued to climb in October, eking out a gain on the heels of September's increase, which was the largest in a year. Since the pandemic hit US shores in early 2020, sales of existing homes have been through a wild ride, as the nearby chart shows. Now it looks like the upward trend in sales is returning despite buyers' ongoing struggle with higher prices and lack of supply. The number of listed, but unsold, existing homes was 1.25 million in October, the lowest number for any October on record (dating back to 1999). Our expectation is that listings will move upward again, at least on a seasonally adjusted basis, as virus fears fade and sellers feel more comfortable showing their homes. Meanwhile, the months' supply of existing homes for sale (how long it would take to sell today's inventory at the current sales pace) was unchanged at 2.4 months in October, remaining near record lows. Despite the ongoing shortage of listings, there is still significant pent-up demand from the pandemic, with buyer urgency so strong in October that 82% of existing homes sold on the market for less than a month. The combination of strong demand and sparse supply has pushed median prices up 13.1% in the past year, but the good news is that price gains have decelerated significantly since hitting a year-to-year gain of 23.6% in May. Sales in 2021 are on track to be the highest for any calendar year since 2006 and we expect another solid year in 2022 as more inventory becomes available and price gains moderate. Millennials are now the largest living generation in the US and have begun to enter the housing market in force, making up over 50% of new mortgage issuance for the first time in 2019. This represents a demographic tailwind for sales for the foreseeable future.
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