A report released by the National Association of Realtors on Thursday unexpectedly showed a continued increase in existing home sales in the U.S. in the month of October.
NAR said existing home sales jumped by 4.3 percent to an annual rate of 6.85 million in October after soaring by 9.9 percent to a revised rate of 6.57 million in September.
The sharp increase came as a surprise to economists, who had expected existing home sales to slump by 1.4 percent to a rate of 6.45 million from the 6.54 million originally reported for the previous month.
With the unexpected spike, existing home sales reached their highest level since February of 2006. Existing home sales were up by 26.6 percent compared to the same month a year ago.
“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” said Lawrence Yun, NAR’s chief economist.
“The surge in sales in recent months has now offset the spring market losses,” he added. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.”
The report said the median existing home price was $313,000 in October, up 0.5 percent from $311,400 in September and up 15.5 percent from $271,100 in the same month a year ago.
Meanwhile, housing inventory at the end of October totaled 1.42 million units, down 2.7 percent from 1.46 million in September and down 19.8 percent from 1.77 million in October of 2019.
The unsold inventory represents an all-time low of 2.5 months of supply at the current sales pace, down from 2.7 months in September and down from 3.9 months a year ago.
“Homebuilders’ confidence has soared even though the actual production has not,” Yun said. “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.”
NAR said single-family home sales surged up by 4.1 percent to an annual rate of 6.12 million in October, while existing condominium and co-cop sales spiked by 5.8 percent to a rate of 730,000.
Next Wednesday, the Commerce Department is scheduled to release a separate report on new home sales in the month of October.
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