WASHINGTON — Americans took advantage of lower mortgage rates and purchased more homes in October, though sales were held back by a shortage of available properties.
The National Association of Realtors said Thursday that sales of existing homes rose 1.9% last month to a seasonally adjusted annual rate of 5.46 million. That’s 4.6% higher than a year ago, suggesting that lower borrowing costs are bolstering the housing market.
Still, the data shows a mixed picture. Housing, including home construction, has picked up this year and fueled economic growth in the July-September quarter for the first time in nearly two years. Economists expect it will boost growth in the current quarter as well.
At the same time, sales have been constrained by a decline in the number of houses for sale.
With the unemployment rate near a 50-year low and wages rising modestly, plenty of Americans are looking to buy. That is pushing up prices. Sales remain below the level reached in 2017 of 5.5 million.
Homes are particularly scarce at lower price points, with sales in the past year falling 11% among houses priced below $100,000, which consists mostly of condos. Sales also slipped in the $100,000 to $250,000 price range. They rose in the $250,000 to $1 million range, and fell among homes priced above $1 million.
Odeta Kushi, deputy chief economist at First American Financial, a title insurance company, said those figures indicate that most home sales are occurring among higher-income earners who already own homes and are trading up.
“That leaves the first-time home buyers out of the mix,” she said. NAR’s data showed that in October, first-time buyers made up just 31% of sales, below longer-run averages.
But increased home construction should boost overall inventory and provide more options for younger buyers, Kushi said. That should support sales in the coming months.
Home construction jumped 3.8% in October and builders also secured more permits for single-family home and apartment construction, a positive sign for future building.
The number of homes on the market fell 2.7% in October from the previous month, leaving just 1.77 million available houses. That’s the fewest since March and would last just 3.9 months at the current pace of sales. A healthy level of inventory is typically at about six months.
For October, the level of homes for sale was the lowest on records dating back to 1999, the NAR said.