Home Inventory Still Low, While Prices Continue to Climb
Song_about_summer / Adobestock
By the end of October, total housing inventory had fallen 0.8% to just 1.25 million units, according to the NAR. This was down 12% from a year ago, when there were 1.42 million units on the market. At the current sales pace, inventory levels would supply the market for just 2.4 months, unchanged from a month ago but down from a 2.5-month supply in October 2020. Despite low inventory levels, home sales remained strong in October, with sales climbing 0.8% month over month. Lawrence Yun, chief economist for the NAR, predicts the current economy will have an impact on prospective buyers. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”
Home Prices Still on the Rise
For a staggering 116 months in a row—the longest streak on record—home prices across the country have increased year over year. In October, the median existing-home price for all housing types climbed 13.1% from a year earlier. What’s more, every sales region in the country reported price gains.
Remote Work Flexibility
High home prices are having a surprising impact on the housing market. The work-from-home trend is quickly becoming a mainstay, as employees are enjoying the flexibility of being able to work from anywhere. This has led to certain parts of the country seeing an increase in home sales. According to Yun, “Record-high stock markets and all-time-high home prices have worked to significantly raise total consumer wealth and, when coupled with extended remote work flexibility, elevated housing demand in vacation regions.”
Who’s Buying?
First-time buyers accounted for 29% of all sales in October, up from 28% a month ago but down from 32% a year ago. All-cash sales, meanwhile, represented 24% of all transactions, up from 23% in September and up from 19% in October 2020. All buyers were contending with the shortage in housing inventory, as the average property remained on the market for just 18 days in October, up from 17 days a month ago but down from 21 days a year ago. Of all the homes sold in October, 82% were available for less than one month.
Regional Data for October
Northeast - Existing-home sales annual rate of 750,000; a decrease of 2.6% from September 2021 and a decrease of 13.8% from October 2020. The median sales price increased 6.4% from October 2020.
Midwest - Existing-home sales annual rate of 1.5 million; pan increase of 4.2% from September 2021 but a decrease of 6.3% from October 2020. The median sales price increased 7.8% from October 2020.
South - Existing-home sales annual rate of 2.78 million; an increase of 0.4% from September 2021 but a decrease of 3.5% from October 2020. The median sales price increased 16.1% from October 2020.
West - Existing-home sales annual rate of 1.31 million; unchanged from September 2021 but a decrease of 5.1% from October 2020. The median sales price increased 7.7% from October 2020.
