In more evidence that the pandemic is altering people’s views of where they live, existing-home sales continued rising in October, marking the fifth straight month of growth. The steady increases provide another example of the appetite for housing being demonstrated by people who are staying home a lot more than they used to.
According to a new report from the National Association of Realtors, total existing-home sales, which includes sales of single-family homes, townhomes, condos, and co-ops, increased by 4.3% in October compared to September.
The larger increase was seen in the year-over-year comparison, where October 2020’s home sales were 26.6% higher than they were in the same month in 2019.
"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," Lawrence Yun, NAR's chief economist, said.
As others have pointed out, outside of the pandemic, the main headwind for housing is the lack of available inventory. Put simply, there just aren’t enough homes on the market.
According to NAR’s report, the total nationwide housing inventory at the end of October was 1.42 million units, down 2.7% from September and down 19.8% from last October.
In fact, unsold inventory (meaning homes on the market) is lower than it’s ever been. According to NAR, unsold inventory is at an all-time low of 2.5 months at the current sales pace, meaning that if home sales continued at their current pace, there are only enough homes on the market to sustain home sales for 2.5 months.
Given that inventory is so scarce, it’s no surprise that the homes that do become available aren’t staying on the market for very long.
According to NAR, approximately 72% of homes sold in October 2020 were on the market for less than one month. The typical property was on the market for just 21 days, down from 36 days in October 2019.
Despite that, Yun doesn’t expect home sales to slow down next year. Just the opposite, in fact.
"The surge in sales in recent months has now offset the spring market losses," Yun said. "With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market's growth to continue into 2021."
According to Yun, existing-home sales are expected to rise by 10% in 2021 over this year’s strong numbers.