Existing home sales saw a 1.4% boost last month compared to the decline seen the six months prior. National Association of Realtors data shows that 5.22 million units were sold in October compared to 5.15 million in September and a forecast October result of 5.2 million.
Key Takeaways
- While the report shows the first increase in 6 months, October’s rate of sales is still 5.1% lower than this time last year.
- The average sales price was $255,400, up 3.8% from last year which is a below-average yearly increase.
- Homes stayed on the market for an average of 33 days in October with first-time buyers making 31% of purchases, 9% less than the long-term average.
- Sales in the Northeast jumped 1.5% with a 1.9% increase in the South and a 2.8% increase in the West. The Midwest saw a decline in October of 0.8%.
The annual decline from October 2017 of 5.1% in existing home sales is the largest annual decline since July 2014, with rising interest rates the most likely culprit. The Fed has implemented three rate hikes this year already with a fourth expected in December, which would likely compound the issues seen in the housing market which has seen steady decline in mortgage applications and home sales.
Prices have climbed with mortgage rates at their highest in years, with October 2018 being the 80th month in a row to experience consecutive monthly housing price gains, although the NAR report noted that more homes tend to go up for sale during the winter months which allows some buyers to enter the market.
Mortgage refinancing applications have hit a 17-year low according to this week’s survey from the Mortgage Bankers Association with the average rate of interest for a 30-year fixed-rate mortgage of under $453,100 now at 5.16% compared to 4.88% just nine weeks prior.
Expert Outlook
¨NAR’s Lawrence Yun called upon the Federal Reserve to rethink interest rate policy to help invigorate the slumping housing market, saying:
“Home sales could further decline before stabilizing. The Federal Reserve should, therefore, re-evaluate its monetary policy of tightening credit, especially in light of softening inflationary pressures, to help ease the financial burden on potential first-time buyers and assure a slump in the market causes no lasting damage to the economy.”
Market Reaction
Gold prices saw little change directly following the report and are holding firm to solid gains with spot gold up 0.68% and trading at $1,227.33/oz and December Comex Futures trading at $1,227.80/oz and up 0.54%.
Global economic growth concerns such as we’re seeing at the moment throughout the trade war tend to be beneficial for gold prices with investor sentiment towards equities becoming more pessimistic.
Gold Price Chart
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