U.S. Existing Home Sales Unexpectedly Rose in October
- Existing home sales in the US increased to 4.79 million annualized units in October 2012 from the revised 4.69 million reported in the previous month. Market expectations were for sales to remain unchanged in the month.
- Homes available for sales fell by 1.4% and, combined with the increase in sales, pushed the months’ supply of unsold homes down to 5.4 in October from 5.6 in the previous month. This represents the lowest reading since February 2006.
- The median price of existing homes jumped 11.1% on a year-over-year basis as inventories tightened and the share of distressed property sales declined from a year ago.
- The increase in existing home sales in October started
the final quarter of 2012 off on the right foot as the 4.79
million annualized units already represented an 11.3% annualized
increase from the average seen in the third quarter of 2012,
which represented the best quarterly pace of sales since the tax
credit-boosted level recorded in the second quarter of 2010.
While maintaining the standard caveat that housing activity
remains depressed relative to pre-recession norms, the
residential real estate market has seen considerable progress
during the last year, and the combination of shrinking
inventories and firming prices supports the view that the
improvements are expected to continue in the forecast horizon as
market conditions continue normalize.
There were 4.79 million existing homes sold in the US in October on a seasonally adjusted and annualized basis, which was a 2.1% increase from the downwardly revised 4.69 million annualized units sold in September (initially reported as 4.75 million). The level of sales in October was slightly above the 4.75 million sales expected by the market. The increase in resale activity in October reflected gains in both housing types, with sales of single-family homes up 1.9% to 4.22 million annualized units while sales of condos and co-ops posted a 3.6% increase to 0.57 million, which was the highest level of sales since January 2011. Strength was seen in the West (4.4%), South (2.1%), and Midwest (+1.8%), while a modest decrease in the Northeast (-1.7%) provided some offset.
The absolute number of existing homes available for sale fell by 1.4% to 2.14 million units in October, which was the lowest absolute inventory since December 2002. At October’s pace of sales, it would take 5.4 months to clear this inventory of unsold homes, which is down from the reading of 5.6 seen in September and the lowest reading since February 2006.
The national median sales price of existing homes rose on a year-over-year basis for the eighth straight month in October, and the pace of increase accelerated sharply to 11.1% from the 7.9% rate seen in September. The increase in October represented the largest increase since November 2005. The strong gain in prices comes as distressed sales (foreclosures and short sales that typically sell at steep discounts) accounted for 24% of total sales and was unchanged from the prior month but down from 28% in October 2011.
The increase in existing home sales in October started the final quarter of 2012 off on the right foot as the 4.79 million annualized units already represented an 11.3% annualized increase from the average seen in the third quarter of 2012, which itself represented the best quarterly pace of sales since the tax credit-boosted level recorded in the second quarter of 2010. While maintaining the standard caveat that housing activity remains depressed relative to pre-recession norms, the residential real estate market has seen considerable progress during the last year, and the combination of shrinking inventories and firming prices supports the view that the improvements are expected to continue in the forecast horizon as market conditions continue normalize.
Information contained in this report has been prepared by the Economics Department of RBC Financial Group based on information obtained from sources considered to be reliable. While every effort has been made to ensure accuracy and completeness, RBC Financial Group makes no such representation or warranty, express or implied. This report is for information purposes only and does not constitute an offer to sell or a solicitation to buy securities.
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