U.S. home sales rose in October to their highest rate since the height of the last housing boom some nine-and-a-half years ago. Aided by a strengthening labor market and mortgage rates still at historical lows, home sales surged to an annual rate of 5.6 million units last month. It’s the highest rate since February 2007.
Reuters noted in its report the booming housing market is a sign of consumers being increasingly confident in the overall U.S. economy. As one analyst noted, “you have to be pretty confident to buy a house.
“ Consumers certainly were [confident] in October,” Chris Rupkey, chief economist of MUFG Union Bank in New York, told Reuters. “Showing no hesitation whatsoever ahead of the presidential elections with its often harsh rhetoric and focus on all the things wrong with the economy.”
High demand for homes is certainly nothing new here in the Silicon Valley and surrounding areas, but to see more homeowners stepping forward nationwide is also a good sign. It could even perhaps ease the ultra-tight housing supply in areas like here Silicon Valley. Reuters report the increase in home sales follows additional reports that found housing starts across the nation have surged in recent months.
Lack of inventory has been a drag on the housing market for several years. Folks looking to buy are instead left in bidding wars and often come away empty. As a result, the National Association of Realtors reported home prices in October were up another 6.0 percent year-over-year. But with more houses now coming in the pipeline, it’s hoped this supply-and-demand problem will ease and prices will stabilize.
The pace of home sales in October equated to a 4.3 month supply of available homes. To give you an idea of how tight supply is, a full six-month supply of homes is indicative of a healthy balance between supply and demand.
But all in all, it was a great report from the N.A.R. in October. Most housing analysts expect this forward momentum to carry into the new year.