The National Association of Realtors reported Monday that existing-home sales increased 0.8 percent from the previous month to a seasonally adjusted annual rate of 6.34 million, the highest rate since January. Sales fell 5.8 percent in October compared to the same month last year.
According to Lawrence Yun, NAR's chief economist, existing-home sales are on track to exceed six million this year, which would be the highest annual pace since 2006.
According to NAR, the median existing-home price increased 13.1 percent year on year in October to $353,900.
Since the start of the Covid-19 pandemic, low mortgage interest rates have fueled a large wave of home-buying demand. Simultaneously, the number of homes on the market has remained low, and newly listed homes are frequently snapped up quickly.
After the summer, home sales typically fall. Many families do not want to relocate during the school year, and shoppers frequently stay at home during cold weather and the holiday season.
The earlier this year's frenzied housing market has leveled off. However, sales are still higher than before the pandemic. Many buyers who have been put off by rapidly rising prices may re-enter the market if signs of a slowdown emerge, according to economists and real-estate agents.
Mr. Yun stated that "the housing market remains strong" as a result of low interest rates, a strong job market, and rising stock market values.
Economists polled by The Wall Street Journal predicted a 1.4 percent monthly drop in sales of previously owned homes, which account for the majority of the housing market.
Home prices continue to rise rapidly, as a lack of inventory forces many buyers to compete in bidding wars. However, price growth has slowed since the beginning of the year. According to Zillow Group Inc., nearly 15% of listings had their prices reduced in October, up from 7.9% in April.
When Bethanie Hill and her boyfriend, Tyson Bybee, went house hunting in eastern Idaho in August, they were surprised by the prices.
They had a $275,000 budget, and many of the houses in that price range were in poor condition, according to Ms. Hill.
"Spending nearly $300,000 on a house that needs a lot of work sounded crazy to me," she explained, "but that's the market right now."
The couple discovered a house in Rigby, Idaho, that had been relisted several times after previous offers had failed. They paid around $225,000 for it in September.
The market is still moving quickly, and many homes are selling for more than their asking price. According to NAR, the average home sold in October was on the market for 18 days, up from 17 days the previous month.
At the end of October, there were 1.25 million homes for sale, a 0.8 percent decrease from September and a 12 percent decrease from October 2020. At the end of October, there was a 2.4-month supply of homes on the market based on current sales rates.
According to real estate agents, the competitive market is discouraging many prospective sellers from listing their homes.
"The issue is that many people don't want to sell because they don't know where they're going to move," said Mark Johnson, CEO of Texas-based brokerage JPAR Real Estate.
At lower price points, where buyers with limited cash can be outbid by investors or cash buyers, the market is especially competitive. According to the National Association of Realtors, approximately 24 percent of existing-home sales in October were paid in cash, up from 19 percent a year ago.
The market's share of first-time buyers fell to 29 percent, down from 32 percent a year ago.
Existing-home sales increased the most month over month in the Midwest, up 4.2 percent, and 0.4 percent in the South.
Because of the high demand, construction activity has increased, but home builders are facing material delays and labor shortages. The Commerce Department reported last week that housing starts, a measure of home construction in the United States, fell 0.7 percent in October compared to September. Residential permits, which can be a leading indicator of future home construction, increased by 4%.
The Journal's parent company, News Corp, also operates Realtor.com under license from the National Association of Realtors.