Key Takeaways:
- The Midwest leads in home sales with a 4.2 percent gain while the Northeast lags with a 2.6 percent drop
- Persistent low inventory, which fell to 1.25 million units, continues to limit sales
- Average home prices stand at $373,000, median at $354,000, 8% and 13% higher respectively than a year earlier
Sales of existing homes rose by a modest 0.8 percent in October to a total of 6.3 million houses on an annual basis. Monthly home sales have been averaging six million annualized units for most of the year, but have exceeded that level for the past two months for the first time
since February. (Figure 1.)
Despite recent gains, existing home sales are 5.8 percent lower than they were in October of last year, when they had reached their highest levels since the early months of 2006 – the peak of the last housing boom.
It should be noted that last year’s pace was the result of the rebound from the pandemic, when the economic shutdown drove home sales to an annualized low of four million in May of 2020 (shown by the black line in Figure 1.)
The 6.3 million home sales in October includes single- family homes, townhouses and condominium units. Single family houses sold 5.66 million units in October, just under 90 percent of all existing home sales and a decline of 5.8 percent from last year.
Existing home inventory has dropped for the third straight month, to 1.25 million, enough to support just 2.4 months of sales.
Total existing home sales increased in two of the four U.S. regions. Sales in the South, the nation’s largest housing market, rose 0.4 percent to 2.78 million units, while the Midwest posted a 4.2 percent gain to 1.5 million units —the largest increase of all regions. Meanwhile, sales in the Northeast fell 2.6 percent to 750,000 homes sold, while sales in the West were flat at 1.31 million.
Similar to the challenge facing new home sales, existing home sales have been limited due to persistent low inventory (Figure 2). Existing home sales Inventory fell to 1.25 million in October, the third consecutive monthly drop. Although inventory had improved significantly since the beginning of the year, it has since tightened up in the last three months. At the current sales pace, existing inventory is only sufficient to meet 2.4 months of sales.
Home prices continue to increase. The average price of an existing home is $373,000 (Figure 3.), 8.2 percent higher than a year ago. The median price of an existing home was $354,000, 13 percent higher than a year ago when it was $313,000.
Average home prices rose in all four regions, with the South posting the biggest gain of 10.9 percent. The South also has the second lowest average price among the four regions at just $341,000, or 8.6 percent below the national average.
The highest home prices are in the West, at just under $500,000, which is 8.8 percent above last year and 34 percent above the national average.
The lowest-priced homes are in the Midwest, with the average of $287,000 at 23 percent below the U.S. average. Meanwhile, prices in the Northeast are the second highest in the nation at $388,000, nearly 4 percent above the national average.
Charts:
