A report out this week says sales of previously owned U.S. homes rose in October for the first time in 7 months. But the market remains relatively soft, with sales down 5.1% from a year earlier, the biggest drop since 2014. The report from the National Assn. of Realtors (NAR) said that the annual rate of existing-home sales increased to 5.22 million from the previous month; economists had predicted 5.2 million. The median sales price rose 3.8% from a year earlier, while the inventory of available homes expanded 2.8%, the 3rd straight increase.
Other reports this week gave a mixed picture of the sector: Sentiment among homebuilders dropped the most since 2014 in November amid pessimism over both current and future demand, while government data showed housing starts rebounding slightly in October. Federal Reserve officials are still expected to raise interest rates in December for the 4th time this year and continue tightening in 2019, as consumer spending is seen remaining solid.
At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, below the 5 months’-supply mark that NAR consider consistent with a tight market. Existing home sales account for about 90% of the market and are calculated when a contract closes. The remainder of the market is made up of new-home sales, which are a timelier indicator as they’re tabulated when contracts get signed.