Sales in the largest category of U.S. homes declined in October, but the housing market performance this year has still been the best since the fading days of the housing bubble eight years ago.
Closings on existing homes which comprise 90 percent of the American housing market, dropped 3.4 percent to an annual rate of 5.36 million units from September’s unrevised 5.55 million pace, according to the National Association of Realtors. That had been the second highest total since 2007. Economists had forecast 5.40 million purchases.
In the ten months of this year sales of previously occupied homes have averaged 5.26 million units. If that pace remains for the last eight weeks, 2015 will finish with the highest turnover since 2006 when sales measured 6.53 million for the full year. Annual sales were 3.9 percent higher in October, a little more than half the 7.60 million rate in September.
Sales were unchanged in the Northeast, a sharp drop from September's 8.6 percent gain. They were down 0.8 percent in the Midwest from a 2.3 percent gain in September, off 3.2 percent in the South and lower by 8.7 percent in the West. Price increases had been the highest in the areas that saw the biggest sales contraction in October, the South and the West. Higher prices over the past few years have were largely caused by a shortage of inventory.
The number of homes on the market nationwide slipped 2.3 percent in October to 2.14 million units from 2.19 million the month before. It was the lowest inventory since March. At the current selling rate it would take 4.8 months to completely clear the inventory, essentially unchanged from September’s 4.7 months. A five month supply is considered normal market conditions.
Sales of single -family homes dropped 3.7 percent to a yearly rate of 4.75 million units. Sales of properties in multi-family developments fell 1.6 percent.
The median price of a home fell slightly in October to $219,600 from $221,700.
Borrowing costs also have provided an easy entry for those who can secure credit and find a house to buy.
The average 30-year fixed mortgage rate was 3.97 percent in the week ending November 19th, according to Freddie Mac, the Federal government housing agency. That is close to the 3.83 percent average for this year, despite the pending Fed rate increase next month. It compares favorably with the 6.06 percent average in the five years leading to the last recession in 2008. .
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