The US real estate boom remained unstoppable in October, according to data from an industry group, with the pace of existing home sales growing beyond expectations, tightening inventory and pushing prices up.
The report from the National Association of Realtors (NAR) indicated that the housing market remains one of the few bright spots in a rapidly darkening US economy beset by rising coronavirus cases and Congress’s continued failure to agree on a new stimulus measure.
Existing home sales rose 4.3 percent from September to an annualized rate of 6.85 million, seasonally adjusted, the NAR said, its highest level since November of 2005 and a 26.6 percent jump from a year-ago.
Buyers have been aided by low mortgage rates after the Federal Reserve slashed its benchmark lending rate to near-zero in March as the pandemic arrived.
“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” said NAR Chief Economist Lawrence Yun.
Existing home sales rose in all regions of the United States, and unsold inventory in October fell to a record low of 2.5 months at the current rate. That pushed prices up 15.5 percent from the same month last year to a median of $313,000.
“Homebuilders’ confidence has soared even though the actual production has not,” Yun said, predicting sales would rise 10 percent next year.
“All measures, such as reduction to lumber tariffs and expansion of vocational training, need to be considered to significantly boost supply and construct new housing.”
The US is home to the world’s largest coronavirus outbreak which is surging again, with 157,950 new infections over the 24 hours prior to Wednesday, the same day total deaths from the disease climbed above 250,000.
That’s raised fears of a renewed economic downturn made worse by Congress’s inability to pass a new stimulus measure to assist the economy’s recovery.
Nancy Vanden Houten of Oxford Economics warned the shortage of inventory will eventually keep some buyers out of the market, while others will cancel plans as the pandemic returns.
“We do expect the pace of sales to slow in the fourth quarter, with a weak recovery, resurgent pandemic and depleted inventories weighing on activity, although the risk may be for further upside surprises,” she said in an analysis.