Existing home sales increased in October for the second consecutive month, and exceeded year-over-year levels for the first time in a year, despite no improvement among first-time buyers. Existing home sales increased 1.5% in October, and were 2.5% above the same period a year ago. The National Association of Realtors (NAR) reported October 2014 total existing home sales at a seasonally adjusted rate of 5.26 million units combined for single-family homes, townhomes, condominiums and co-ops, up from an upwardly revised 5.18 million units in September.
Three regions increased in October, ranging from 5.1% in the Midwest to 2.8% in the South. The West declined 5.0% from last month. Year-over-year, the same three regions increased, ranging from 5.3% in the South to 2.5% in the Midwest. The West declined 3.4% from the same period a year ago. Seasonally adjusted condominium and co-op sales increased by 3.3% in October and were unchanged from the same period a year ago.
The first-time buyer share was unchanged for the fourth consecutive month at 29%, remaining far behind the historical average first-time buyer share of about 40%. Tight lending conditions continue to buffet first-time buyers despite reports of easing standards, and a full recovery awaits their return.
Total housing inventory decreased 2.6% in October to 2.22 million existing homes. At the current sales rate, the October 2014 inventory represents a 5.1-month supply, the lowest since March. NAR, however, also reported that in October the typical time on the market increased to 63 days, compared to 56 days in September, 53 days in August and 54 days during the same period a year ago. NAR reported that 33% of homes sold in October were on the market less than a month, compared to 35% in September and 40% the prior two months.
The October distressed sales share decreased to 9% in October, reporting below 10% for three of the past four months. Distressed sales are defined as foreclosures and short sales sold at deep discounts. October all cash sales increased for the second consecutive month to 27% in October, but were down from 31% during the same period a year ago. Individual investors purchased a 15% share in October, an increase from 14% in September and 12% in August, but down from a 19% in October 2013. Some 65% of October investors paid cash, up from September and August levels, but down from the 69% level in June and July. The slow but continuing withdrawal of cash investors will create more opportunity for first-time buyers.
The median sales price decreased for the fourth consecutive month in October to $208,300 compared to $209,100 in September. However, the October median sales price was 5.5% above the same period a year ago, and represented the 32nd consecutive month of year-over-year price increases. The median condominium/co-op price increased slightly to $205,400 from $205,200 in September, and is up 4.5% from the same period a year ago.
The Pending Home Sales Index increased a modest 0.3% in September, suggesting the positive momentum in existing sales will continue through the year. The one weak spot remains in the first-time buyer segment.