Existing Home Sales Rose 1.4% in October


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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Posted on Wednesday, November 21, 2018 @ 11:33 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.