Sales of previously owned homes, or resales, slumped in October, despite average mortgage rates staying below 4 percent for the third straight month, according to the National Association of Realtors.
But the previous annual pace of home sales recorded in September was the highest since 2007, and home resales are still 3.9 percent above a year ago, at an annual rate of 5.16 million, Realtors said.
Nonetheless, tight inventories, higher home prices and affordability issues among prospective young buyers are all factors pressuring the housing market.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October, from 5.55 million in September.
“New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” said Lawrence Yun, NAR chief economist. “Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales.”
The median price of an existing home rose 5.8 percent from October 2014 to $219,600.
The percent share of first-time buyers increased to 31 percent in October, up from 29 percent both in September and a year ago. NAR’s annual Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers fell to its second-lowest level since the survey began in 1981.
Distressed sales – foreclosures and short sales – declined to 6 percent in October, which is the lowest since NAR began tracking in October 2008; they were 9 percent a year ago. Five percent of October sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in October (17 percent in September), while short sales were discounted 8 percent (19 percent in September).
“All-cash and investor sales are still somewhat elevated historically despite the diminishing number of distressed properties,” adds Yun. “With supply already meager at the lower-end of the price range, competition from these buyers only adds to the list of obstacles in the path for first-time buyers trying to reach the market.”