The housing market showed some improvement in October, according to data collected by the National Association of Realtors. Existing-home sales increased 2% to 5.48 million, while pending home sales had their best month since June. The Pending Home Sales Index increased to 109.3, a 3.5% increase over September's rating.
While the month-over-month change looks promising, both figures came in below those of October 2016. The Pending Home Sales Index was 0.6% higher in October 2016 than it was this year, and existing-home sales were 0.9% higher last year as well.
A major factor that contributed to the year-over-year decline has been a continuous theme over the past year: A lack of inventory that prevents prospective homebuyers from finding a home in their ideal location and price range.
"Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market," Lawrence Yun, the NAR's chief economist, explained in a press release.
Though an inventory deficit prevented some home shoppers from making a purchase, other factors lent to the increase in activity compared to September 2017. Yun pointed out that job growth and wage increases have allowed some consumers to consider buying a home.
In October, 261,000 nonfarm payroll positions were added throughout the U.S., and unemployment ticked down to 4.1%, according to the U.S. Bureau of Labor Statistics. Hourly earnings didn't change much from the month prior, but September boasted an impressive 12-cent increase in the average pay per hour. As such, the average hourly pay of $26.53 seen in October is a positive indicator for the jobs landscape.
After the U.S. was impacted by a string of hurricanes, it was understandable that homebuying activities would slow down for some time. However, the most recent data released by NAR suggests that the negative effects of the natural disasters are reducing.
"The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida," Yun explained. "However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms."
In addition to the positive gains in home sales, October also experienced an uptick in housing starts, according to information released by the U.S. Census Bureau. There were 1.3 million housing starts in October, a 13.9% increase over September's estimated numbers. Despite the increase, however, this remains 2.9% lower than the number of housing starts realized in October 2016.
About two-thirds of the housing starts were single-family homes, the most popular housing type among homebuyers. The remaining units were constructed in buildings with five units or more.
Housing completions were up 12.2%, reaching a seasonally adjusted annual rate of 1.2 million. Slightly fewer than two-thirds of these were single-family homes.
The future for home construction looks bright as well, with 1.3 million building permits authorized in October. This is an increase of 0.9% over October 2016's numbers and 5.9% higher than September 2017.
Prospective homebuyers hoping to purchase a home yet this year may want to get preapproved for a residential mortgage to help the closing process go faster and more smoothly. To find out what loan programs would best suit you, reach out to Academy Mortgage.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2016 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.