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Unemployment levels are down and wages are slowly starting to rise, which is making home ownership an affordable reality for more potential buyers. But the ongoing housing inventory shortage is leading to higher home prices, making it difficult for those potential buyers to afford their dream homes. Low inventory isn’t just leading to an increase in home prices, though, it’s also putting downward pressure on existing-home sales. Supply shortages resulted in a decline in year-over-year closings for the second straight month. Existing-home sales reached 5.51 million in October, down 0.9 percent from a year ago. However, this is the strongest month-over-month sales pace since June. What’s more, all four regions of the country recorded increases in sales activity in October.

Fewer For Sale Signs
By the end of October, there were 1.8 million existing homes on the market; this is a drop of 3.2 percent from a month ago and a staggering 10.4 percent from a year ago. For 29 months in a row, inventory levels have fallen year over year. At the current sales pace, unsold inventory would supply the housing market for a meager 3.9 months. In comparison, a year ago, unsold inventory represented a 4.4-month supply.

Fast Sales
An average property spent 34 days on the market in October. This time is unchanged from a month ago and seven days less than October 2016. Of all the homes sold in October, 47 percent were sold in less than a month. In areas with a healthy job market, homes were being sold at an even quicker pace. And all listings, according to Lawrence Yun, chief economist for National Association of Realtors, “continue to go under contract typically a week faster than a year ago. With the seasonal decline in inventory beginning to occur in most markets, prospective buyers will likely continue to see competitive conditions throughout the winter.”

Regional Home Sales

Northeast – Existing-home sales annual rate of 740,000; an increase of 4.2 percent from September 2017 and unchanged from October 2016.

Midwest – Existing-home sales annual rate of 1.31 million; a slight increase of 0.8 percent from September 2017 and a decrease of 1.5 percent from October 2016.

South – Existing-home sales annual rate of 2.16 million; an increase of 1.9 percent from September 2017 and a decrease of 1.8 percent from October 2016.

West – Existing-home sales annual rate of 1.27 million; an increase of 2.4 percent from September 2017 and 0.8 percent from October 2016.

Month-Over-Month Home Sales Increase Despite Low Supply