October 2017 Existing Home Sales Rebound from Hurricane Slump, Up 2.0 Percent Sequentially from Prior Month, (Seasonally Annualized), But Down 0.9 Percent Year-Over-Year

Existing home sales sprang back in October 2017, rising 2.0 percent (on a seasonally adjusted annualized rate) from the downward trend in September arising from Hurricane Harvey and Irma impacts, but remained off slightly (down 0.9 percent) from a year ago according to the National Association of Realtors® (NAR).  Median price was $247,000 (not seasonally adjusted), for  a gain of 5.5 percent in the prior 12 months.  Median prices have now increased for 68 consecutive months on a year-over-year basis.

The following graph shows the monthly median price and the total number of home sales in the prior 12 months commencing January 2014.  Total housing sales  (raw monthly data – not seasonally adjusted) for the 12-month period ending October 2017 of 5.51 million was up 2.0 percent versus the 12-months ending October 2016 (5.38 million).

The next graph shows the monthly raw data (not seasonally adjusted) for each month commencing January 2014.  Following that are median prices for the same time period.  With just a 3.8 month estimated inventory on a seasonally adjusted basis with six months considered normal, supply continues to trail demand, resulting in rising home prices.  The 1.8 million listings for sale as of the end of October was down 10.4 percent compared to a year ago.

The final graph shows average home prices (not seasonally adjusted), which peaked at an all-time record $303,500 in June of 2017.   The decline since then is all due to the natural seasonal effect.

Other metrics and insights from the NAR release included:

  • Typical time on the market was 34 days in October 2017 versus 41 days a year ago.  47 percent of the homes sold in October were on the market less than one month
  • 1st time homebuyers made up 32 percent of all transactions in October 2017, up from 29 percent a month earlier but down slightly from the 33 percent a year ago
  • One-in-five closings (20 percent) in October were all-cash transactions, down from 22 percent a year ago
  • Investors bought 13 percent of all October sales, unchanged from a year ago
  • Distressed sales made up just four out of every 100 transactions in the month, with three being foreclosures and just one out of 100 a short sale

To read the entire press release from NAR click https://www.nar.realtor/newsroom/existing-home-sales-grow-20-percent-in-october

Am sticking with my forecast of a 1.96 percent increase in 2018 despite record-tight inventories in many markets.   Texas and Florida housing markets should boom in 2018 assuming no new exogenous shocks as markets post-hurricane typically out-perform.  See my white paper on the impact of Hurricanes at http://blog.stewart.com/stewart/2017/09/13/hurricanes-housing-and-the-economy-analysis-from-stewart-chief-economist-ted-c-jones-phd/

Ted

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