November 22, 2021 | 10:21
House #1, House #2, or House #3? We decided on......
If you're interested in moving up, downsizing, or buying a second home .... there are still a number of hurdles to climb. Homes are pricier, there's still not a lot of choice, and you need patience if you are buying new furniture or a car to get from Point A to Point B in your new hood. But Americans are still clearing those hurdles. U.S. existing home sales unexpectedly rose for the second month in a row, albeit by a more moderate 0.8%, to 6.34 mln units annualized in October, the highest since January. Single-detached homes made up all the gains (+1.3%) while condo sales were down (-2.9%). The share of homes bought by first-timers is still quite low at 29%, which is down from a year-ago's 32% share, and well below the 40%-to-45% range during normal, healthy times. Investors or 2nd homebuyers saw their share climb 4 ppts to 17%, while repeat homebuyers made up 47%.
Inventory remains a problem.... the number of homes available for sale fell for the third straight month, or 12.0% below year-earlier levels. The month's supply is really low at 2.4. And we all remember what happens to prices when supply < demand? The median sales price climbed 13% y/y, the 15th consecutive double-digit reading. Great for homeowners who have no interest to move; bad for those who need to move.
Bottom Line: How many times can we say that the housing market is resilient? Of course, the threat of higher interest rates is also pushing buyers off the sidelines. And with the possibility of an even more dovish Fed Chair now off the table (Lael Brainard will be Vice-Chair), the possibility of a sooner Fed rate hike in 2022 has risen.