Sales of previously owned U.S. homes rose in October for the first time in seven months. But the market remains relatively soft, with sales down 5.1% from a year earlier, the biggest drop since 2014.
The National Assn. of Realtors said Wednesday that the annual rate of existing-home sales increased to 5.22 million from the previous month; economists had predicted 5.2 million. The median sales price rose 3.8% from a year earlier, while the inventory of available homes expanded 2.8%, the third straight increase.
Housing is being buffeted by the highest mortgage rates in eight years and rising property prices that continue to outpace wages. Residential investment accounts for about 3.9% of the economy.
Two other housing reports this week gave a mixed picture of the sector: Sentiment among homebuilders dropped the most since 2014 in November amid pessimism over both current and future demand, while government data showed housing starts rebounding slightly in October. Even with the slowdown in the housing market, Federal Reserve officials are still expected to raise interest rates in December for the fourth time this year and continue tightening in 2019, as consumer spending is seen remaining solid.
Lawrence Yun, chief economist of the Realtors group, urged the Fed to consider pausing its interest-rate hikes amid other indicators such as soft inflation. “Demand is being choked off” by higher borrowing costs, Yun said at a briefing in Washington accompanying the report.
Home purchases rose in three of four regions: the Northeast, South and West; sales declined in the Midwest. Sales declined from a year earlier in the largest price category, the $100,000-to-$250,000 range, as well as the below-$100,000 category; they rose at prices above $250,000.
The monthly increase in sales was more pronounced in condominium and co-op units, which were up 5.3% to 600,000. Sales of single-family homes rose 0.9%.
At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, below the five-months’-supply mark that Realtors consider consistent with a tight market.
Existing-home sales account for about 90% of the market and are calculated when a contract closes. The remainder of the market is made up of new-home sales, which are a timelier indicator as they’re tabulated when contracts get signed.