November 21, 2011
Data Release: Existing Home Sales Up in October
Existing home sales rose 1.4% in October, or 4.97 million units (annualized). Markets were expecting a decline of 2.2%.
Sales of single-family units rose 1.6% on the month, while condo and co-op sales remained flat.
The median existing-home price fell across all regions in the country. The national median price now stands at $162,500, down from $165,800 in September, and down 4.7% from this time last year.
Sales rose in the
Existing home sales in October were up nearly 14% from a year ago, indicating that the market is gradually making progress. There is now about 8 months worth of inventory on the market. That is down from 9.5 months in July, and the lowest level in ten months.
The whittling down of inventory is happening at a time when banks are reporting stronger demand for residential mortgages. In the most recent Senior Loan Officer Survey (SLOS) by the Federal Reserve, nearly 1 out of 3 banks reported increased demand for mortgages – the highest ratio since Q3 of 2010.
Yet even as demand for mortgage credit is improving, headwinds in the market are strong. First, there is a limit to how much the market can recover as long as the unemployment rate stays elevated and income growth remains subdued. Second, banks have not loosened credit standards to the extent that they tightened them during the recession, making it difficult for even the most credit-worthy of borrowers to access mortgage credit. Unfortunately, tightened lending conditions are likely to persist as long as banks’ balance sheets remained strained by non-performing loans made at the height of the credit boom.
Chris Jones, Economist