Fueled by record-low mortgage rates and strong demand, existing home sales, as reported by the National Association of Realtors (NAR), rose for a fifth consecutive month in October and reached its highest level in almost 15 years.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, rose 4.3% to a seasonally adjusted annual rate of 6.85 million in October, the highest level since November 2005. On a year-over-year basis, sales were 26.6% higher than a year ago.
The first-time buyer share increased to 32% in October from 31% both last month and a year ago. However, price gains threaten this share in the future. The October inventory level fell to 1.42 million units from 1.46 million units in September and is down from 1.77 million units a year ago.
At the current sales rate, the October unsold inventory represents an all-time low 2.5-month supply, down from 2.7-month in September and 3.9-month a year ago. This low level supply of resale homes is good news for home construction.
Homes stayed on the market for an average of just 21 days in October, an all-time low, seasonally even with last month and down from 36 days a year ago. In October, 72% of homes sold were on the market for less than a month.
The October all-cash sales share was 19% of transactions, up from 18% last month but unchanged from a year ago.
Tight supply continues to push up home prices. The October median sales price of all existing homes was $313,000, up 15.5% from a year ago, representing the 104th consecutive month of year-over-year increases. The median existing condominium/co-op price of $273,600 in October was up 10.3% from a year ago.
Regionally, all four regions saw month-over-month gains for existing home sales in October, ranging from 1.4% in the West to 8.6% in the Midwest. On a year-over-year basis, sales grew in all four regions as well, with the Northeast seeing the greatest gain (30.4%).
Though sales have flourished and demand remains strong due to low mortgage rates, the imbalance between housing supply and demand could hamper future sales by driving up home prices and restraining affordability. Though builder confidence soared to all-time high and housing starts at highest pace since the spring of 2007, more listings and home construction are still needed to meet this rising demand.