Homebuyers Undaunted by High Prices, Lack of Selection

Houses are staying hard to find and may be getting harder to afford, but surprisingly that didn’t make them harder to sell last month.

Existing home sales increased 0.8% in October from the previous month, despite double-digit yearly increases in median prices and for-sale inventory hovering just above record low levels, according to a monthly sales report released Monday by the National Association of Realtors (NAR). The median sale price rose to $353,900, a 0.7% increase from the month before and 13% above October 2020. Inventory figures showed the housing stock would sell out in just 2.4 months at the current sales pace, not far from the record low 1.9 months recorded last winter. The sales increase defied the expectations of forecasters, who had predicted a slight decline, economists at First Trust said in a commentary.

Home sales have been up and down since the pandemic hit, as buyers with purchasing power bolstered by near record-low mortgage rates and hungry for space to accommodate work-from-home trends have run up against a seriously limited number of homes for sale, driving prices higher. Homes aren’t the only thing going up in price either, with inflation running its hottest in more than 30 years, according to the latest government data. Ironically, that inflation trend may actually be helping home sales as buyers seek an inflation hedge, an NAR economist speculated.

"Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment,” said Lawrence Yun, chief economist at the association, in a commentary.

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