Image: sundaemorning / AdobeStock
For the past five consecutive months, existing-home sales have risen month over month, according to the National Association of Realtors (NAR). In October, sales climbed 4.3% from September and 26.6% from October 2019. Of all the homes sold in October, 72%—or seven out of every 10—remained on the market for less than 30 days.
Home Sales Expected to Climb in 2021
Economists with NAR predict that existing-home sales will continue to climb throughout 2021 to six million, a 10% increase. According to Lawrence Yun, chief economist for NAR, the rapid increase in sales over the past few months has more than compensated for the loss of sales in the spring. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021,” Yun said, “I expect the market’s growth to continue into 2021.”
Inventory Hits Record Low
With home sales rebounding, the chronic problem of a lack of inventory is worsening. At the end of October, there were 1.42 million units available for sale, down 2.7% month over month and down a staggering 19.8% year over year. At the current sales pace, inventory levels would supply the market for only 2.5 months—an all-time low. In comparison, unsold inventory was at a 2.7-month supply in September and a 3.9-month supply in October 2019.
Median Home Prices Increase at Double-Digit Rates
With inventory levels so low, it should come as no surprise that October’s median existing-home price climbed an impressive 15.5% from a year earlier, marking the 104th straight month of year-over-year price gains, which every sales region in the country reported. According to the NAR quarterly “Metropolitan Median Area Prices and Affordability” report, every one of the 181 metropolitan areas experienced single-family existing-home price increases. Of these areas, 65% saw price increase rates in the double digits. To improve affordability, help more buyers enter the housing market, and replenish the short supply of homes, new home construction needs to increase. According to Yun, “Homebuilders’ confidence has soared even though the actual production has not. All measures, such as reduction to lumber tariffs and expansion of vocational training, need to be considered to significantly boost supply and construct new housing.”
Home Sales for October 2020
Northeast: Existing-home sales increased 4.7% from September 2020 and 30.4% from October 2019. At $356,500, the median sales price increased 20.2% from October 2019.
Midwest: Existing-home sales increased 8.6% from September 2020 and 28.1% from October 2019. At $243,500, the median sales price increased 16.7% from October 2019.
South: Existing-home sales increased 3.2% from September 2020 and 26.5% from October 2019. At $272,500, the median sales price increased 15.7% from October 2019.
West: Existing-home sales increased 1.4% from September 2020 and 22.8% from October 2019. At $467,800, the median price increased 15.1% from October 2019.
