Joe Moshe, Broker/Owner, Charles Rutenberg Realty, says the unexpected rise in existing home sales during the month of October is the result of more jobs being created and more home affordability as rents continue to increase.
The National Association of REALTORS recently reported that existing home sales in October rose by 1.4% from the previous month. The NAR reported a seasonally adjusted rate of 4.97 million units in October, compared to September's downwardly adjusted figure of 4.90 million units. Surprisingly, last month's figure was 13.5% higher than the October 2010 pace of 4.38 million units. (Existing-home sales are completed transactions that include single-family homes, townhouses, condominiums and co-ops.)
As existing home sales increased, fewer homes were on the market. The NAR said the total housing inventory at the end of October was 3.33 million existing homes, down 2.2% from the previous month. The number represents an 8.0-month supply, which is lower than September's supply of 8.3 months. Inventories have been on a downtrend since July 2008, when the inventory was at a record 4.58 million homes.
"These figures show signs of a robust housing market," Mr. Moshe said. "What the inventory figures do not take into account is the 'shadow inventory' that is being held back by the banks. These houses are still waiting to be on the market but cannot because of the vast number of homes still waiting to be sold."
The job market may have played a hand in the increase in existing home sales as well. The Commerce Department reported that 80,000 jobs were added in October. While that figure was below economists' expectations, the unemployment rate dipped from 9.1% in September to 9% last month.
"The job market is always a good indicator on how the Real Estate market will fare," Mr. Moshe said. "With more people finding work, they will be able to collect an income and purchase a house. Fewer people out of work means that more houses can be purchased. This shows that the housing market may recover, albeit slowly. It may take a while until the Real Estate market makes a full recovery."
The national median existing home sale price was $162,500 in October, down 4.7% from October 2010, according to the NAR. Interest rates fell as well, with the 30-year rate falling from 4.11% in September to 4.07% in October. Meanwhile, rental rates have gone up as the result of higher demand for apartments. According to the Real Estate data firm Reis Inc., the average rent in the U.S. rose 2.4% during the past 12 months to $1,004 a month. In the previous 12 months, rents increased by 1%.
"Those who are looking for a house see that, compared to renting, buying a home makes more financial sense," Mr. Moshe said. "Those who are currently renting may not be able to afford a home right now due to their income, their ability to pay or their credit score. But homeowners do not see the logic of renting a home or an apartment if they can take advantage of the low prices and interest rates. To them, renting is like throwing money away - which is not a good thing to do in this economy."
Charles Rutenberg Realty is one of the nation's fastest-growing Agencies with more than 1,300 Agents on Long Island, Queens and Westchester. For more information, call (516) 575-7500, or visit www.crrli.com.
About Charles Rutenberg Realty
Founded in 2006, Charles Rutenberg Realty of New York is one of the nation's fastest-growing, most progressive Real Estate Agencies with over 1,300 Agents on Long Island, Queens and Westchester. Charles Rutenberg Realty specializes in residential properties in Nassau, Suffolk, Queens, Kings and Westchester Counties. Among the 1,900 independent Real Estate offices represented by Multiple Listing Services (MLS), Charles Rutenberg Realty has the highest market share for available inventory, listings taken for the first six months of the year and listings under contract. Its Agents are trained in the latest creative marketing programs and can fulfill all their clients' financial and personal needs when buying or selling a home. Charles Rutenberg Realty is headquartered in Plainview, New York, with offices in New York City, Florida and Illinois. For more information, call (516) 575-7500 or visit www.crrli.com.