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First Cut: October existing home sales higher, but limited supplies not driving prices up

Sales of existing homes in October were up 1.9% to 5.46 million units (SAAR) from 5.36 million units in September, and were up 4.6% compared to a year ago. Sales levels reflected the present modest mortgage interest rate environment as opposed to rising mortgage rates at the same time last year which had a near-term peak in November 2018. The month-over-month increase was in single-family homes (up 2.1%) as opposed to multi-units (unchanged).

In spite of limited supplies of homes available for sale which fell to 3.9 months’ worth in October form 4.1 months in September, the median price for an existing home dipped 0.2% to $270,900 in October from the prior month. It is not unusual for the median price to decline at the start of the quarter and then pick up in subsequent months. However, the pace of gains has cooled in 2019 compared to what was seen in 2018.

In spite of relatively low mortgage rates, consumers are driving hard bargains on price to ensure that they are getting the most house for the money. Also, limited supplies of existing housing stock may be driving some buyers to new construction. Sales of new single-family homes will be reported on Tuesday, November 26 at 10:00 ET.

Sales were mixed across regions. Sales declined in the Northeast (down 1.4%) and West (down 0.9%) while these increased sharply for the South (up 4.4%) and modestly for the Midwest (up 1.6%). The weather probably didn’t have much impact on existing sales in October, although the destruction of housing stock could hit the West hard in November.

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