- Existing home sales in the US fell to 5.12 million annualized units in October 2013 from September’s unrevised 5.29 million sales. Market expectations had been for sales to decline to 5.15 million annualized units.
- Homes available for sale dropped to a seven-month low of 2.13 million units thereby indicating the persistence of tight supply conditions in the resale market.
- The median price of existing homes increased 12.8% on a year-over-year basis to mark the eleventh consecutive month of double-digit annual price gains.
There were 5.12 million existing homes sold in the US in October 2013 on a seasonally adjusted and annualized basis, representing a 3.2% decrease from the unrevised 5.29 million annualized units sold in September. The level of sales in October marked the second consecutive month of declines and was below market expectations for a reading of 5.15 million. The slowing in resale activity in the month reflected a decline in single-family home sales (-4.1% to 4.49 million annualized units) while sales of condos and co-ops rose 3.3% (to 0.63 million annualized units) partially to retrace a 4.7% drop in the previous month. The monthly decline was broad based across the country with the steepest drop in the West (-7.1%), followed by modest declines in the Northeast (-2.9%), South (-1.9%), and Midwest (-1.6%).
The absolute number of existing homes available for sale fell by 1.8% to 2.13 million units in October from 2.17 million units in the previous month. At the current pace of sales, it would take 5.0 months to clear this inventory of unsold homes, which is up from 4.9 months in the previous month although remains well below the historical average of 6.4 months. With resale activity constrained by tight supply conditions and with distressed sales making up a smaller share of the market (down to 14% of total sales in October from 25% in October 2012), double-digit, year-over-year price gains have been sustained. October marked the eleventh consecutive month of such increases with the 12.8% increase over the year-ago level bringing the median sales price to US $199,500 in the month.
While today’s report indicated momentum in housing market activity eased to start the final quarter of 2013, it comes after existing home sales reached their highest level in more than six years in the third quarter. An unwinding from earlier robust activity that saw homebuyers rush to close deals in the face of rising mortgage rates likely contributed to moderation in the month. Although the recent government shutdown may dampen activity in the near term, as evident by a recent slump in pending home sales (the majority of which become existing home sales with a one- to two-month lag), any easing in activity is expected to be temporary as strengthening labour markets and rising personal incomes accompany a gradual return to normal market conditions and support increased levels of housing activity from the household sector going forward.
RBC