Sales of previously owned homes increased in October for the second straight month to their strongest pace since earlier this summer but are still being hampered by a lack of supply, a new report showed.
Existing-home sales rose 2 percent last month to a seasonally adjusted annual rate of 5.48 million in October from 5.37 million in September, the best performance since June, the National Association of Realtors (NAR) said on Tuesday.
{mosads}Sales remain 0.9 percent below last year’s levels.
“Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which is in turn giving households added assurance that now is a good time to buy a home,” said Lawrence Yun, NAR chief economist.
“While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated,” Yun said.
Housing inventory at the end of October fell 3.2 percent to 1.80 million existing homes available for sale, and is now 10.4 percent lower than a year ago. Inventory has fallen year-over-year for 29 straight months.
Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago.
The industry is still recovering from the effects on sales from Hurricanes Harvey and Irma in parts of Texas and Florida.
Sales are, however, expected to bounce back to their pre-storm levels by the end of the year.
Still, other concerns are looming for the real estate industry.
NAR says that a pending tax package, which passed the House last week, could further hinder the housing market and is a “direct attack” on homeownership because it will lead to a tax increase for millions of middle-class homeowners.
“Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said NAR President Elizabeth Mendenhall.
NAR is opposed to the House-passed bill and is still working with the Senate on its version, which cleared the Finance Committee last week.
“With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home,” Mendenhall said.
In NAR’s latest report, the median existing-home price was $247,000, up 5.5 percent from October 2016.
On top of rising prices, the average 30-year fixed-rate mortgage rose to a 3.90 percent interest rate in October, matching the highest rate since June, according to Freddie Mac.
Distressed sales — foreclosures and short sales — were 4 percent of sales in October, unchanged from the month prior and down from 5 percent a year ago.
Single-family home sales climbed 2.1 percent to a seasonally adjusted annual rate of 4.87 million in October from 4.77 million in September, but are still 1.0 percent under the 4.92 million pace a year ago.
Sales increased across all four regions in October.
In the Northeast, sales rose 4.2 percent, in the Midwest sales inched up 0.8 percent, sales in the South ticked up 1.9 percent and sales in the West saw a 2.4 percent rise.