State, National Home Sales Post Strong Gains in October

Real Estate In-Depth | November 2016

ALBANY—Home sales in October posted strong gains both in New York State and nationally. The New York State Association of Realtors reported on Nov. 22 that home sales in the Empire State reached the second highest October monthly total on record.

Home sales in the Empire State dipped slightly from one year ago, but still hit the second highest total on record for October, according to the housing market report released by the New York State Association of Realtors. The 11,201 closed sales in October 2016 represents the second highest total for the month after the 12,003 sold in October 2015. The statewide median price growth trend continued with a 3.8% increase from October 2015.

“October home sales, while falling short of last year’s high-water mark, were exceptional as the statewide housing market remained very active into the fall,” said Duncan R. MacKenzie, CEO of the New York State Association of Realtors. “With 10 months on the books, 2016 total sales remain nearly 10% above last year’s total. As we begin to look toward the end of the year, we anticipate completing our fourth consecutive year of home sales growth.”

“Continued low inventory levels present the greatest challenge to sales growth in many areas across the state,” MacKenzie added. “The potential for mortgage interest rate increases may also present a headwind.”

The year-to-date (Jan. 1 -Oct. 31) sales total of 107,625 was 9.8% above the same period last year. October 2016 closed sales totaled 11,201, a 6.7% decrease compared to a year ago.

The year-to-date (Jan. 1 – Oct. 31) statewide median sales price was $235,000, an increase of 2.2% from the same period in 2015. The October 2016 statewide median sales price of $230,500 represents an increase of 3.8% compared to the October 2015 median of $222,000.

October 2016 pending sales in New York State increased 1.7% to reach 10,876 compared to the October 2015 total of 10,698.

The supply of inventory dropped 29.7% at the end of October to 6.4 months supply. It was at 9.1 months at the end of October 2015. A 6-month to 6.5-month supply is considered to be a balanced market. Inventory stood at 72,152, a decrease of 21.1% compared to October 2015.

The National Association of Realtors reported on Nov. 22 that existing home sales ascended in October for the second straight month and eclipsed June’s cyclical sales peak to become the highest annualized pace in nearly a decade. All major regions saw monthly and annual sales increases in October.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 2.0% to a seasonally adjusted annual rate of 5.60 million in October from an upwardly revised 5.49 million in September. October’s sales pace is 5.9% above a year ago (5.29 million) and surpasses June’s pace (5.57 million) as the highest since February 2007 (5.79 million).

October existing-home sales in the Northeast climbed 1.4% to an annual rate of 750,000, and are now 1.4% above a year ago. The median price in the Northeast was $255,500, which is 2.9% above October 2015.

Lawrence Yun, chief economist of the National Association of Realtors. Photo Credit NAR
Lawrence Yun, chief economist of the National Association of Realtors.
Photo Credit NAR

Lawrence Yun, NAR chief economist, says the wave of sales activity the last two months represents a convincing autumn revival for the housing market. “October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” he said. “Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes.”

Added Yun, “The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall.”

The median existing-home price for all housing types in October was $232,200, up 6.0% from October 2015 ($219,100). October’s price increase marks the 56th consecutive month of year-over-year gains.

Total housing inventory at the end of October declined 0.5% to 2.02 million existing homes available for sale, and is now 4.3% lower than a year ago (2.11 million) and has fallen year-over-year for 17 straight months. Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.4 months in September.

“The ramp-up in housing starts in October is a hopeful sign that overall supply can steadily increase enough to provide more choices for buyers and also moderate price growth,” said Yun. “A prolonged continuation of the robust single-family starts pace seen last month (869,000) would go a long way in giving homeowners much-needed assurance that they can list their home for sale and find a new home to buy within a reasonable timeframe.”

Properties typically stayed on the market for 41 days in October, up from 39 days in September but down considerably from a year ago (57 days). Short sales were on the market the longest at a median of 99 days in October, while foreclosures sold in 50 days and non-distressed homes took 39 days. Forty-three percent of homes sold in October were on the market for less than a month.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched up in October for the second straight month, rising to 3.47% from 3.46% in September. The average commitment rate for all of 2015 was 3.85%.

“As a result of the anticipated economic stimulus in early 2017, mortgage rates post-election have now surged to around 4% as investors expect a strengthening economy and higher inflation,” said Yun. “In the short-term, some prospective buyers may rush to lock in their rate and buy now, while others—especially those in higher-priced markets—may be forced to delay as a larger monthly payment outstretches their budget.”

All-cash sales were 22% of transactions in October, up from 21% in September but down from 24% a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in October, down from 14% in September and unchanged from a year ago. Sixty-one percent of investors paid in cash in October.

Distressed sales—foreclosures and short sales—inched forward to 5% in October, up from 4% in September but down from 6% a year ago. Four percent of October sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 18% below market value in October (15% in September), while short sales were discounted 16% (11% in September).

Inventory data from Realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in October were San Francisco-Oakland-Hayward, CA, 35 days; San Jose-Sunnyvale-Santa Clara, CA, 37 days; Seattle-Tacoma-Bellevue, WA, 42 days; Nashville-Davidson-Murfreesboro-Franklin, TN, 43 days; and Denver-Aurora-Lakewood, CO, at 44 days.

Single-family and Condo/Co-op Sales

Single-family home sales increased 2.3% to a seasonally adjusted annual rate of 4.99 million in October from 4.88 million in September, and are now 6.6% above the 4.68 million pace a year ago. The median existing single-family home price was $233,700 in October, up 5.9% from October 2015.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 610,000 units in October (unchanged from September and a year ago). The median existing condo price was $220,300 in October, which is 6.2% above a year ago.