By CHRISTOPHER RUGABER
AP Economic Writer
WASHINGTON (AP) — Americans took advantage of lower mortgage rates and purchased more homes in October, though sales were held back by a shortage of properties for sale.
The National Association of Realtors said Thursday that sales of existing homes rose 1.9% last month to a seasonally adjusted annual rate of 5.46 million. That’s 4.6% higher than the number for a year ago, suggesting that lower borrowing costs are bolstering the housing market.
Still, the data show a mixed picture. Housing, including home construction, has picked up this year for the first time in nearly two years, pushed by economic growth in the July-September quarter. Economists expect it will boost growth in the current quarter as well.
At the same time, sales have been constrained by a decline in the number of houses for sale.
With the unemployment rate near a 50-year low and wages rising modestly, plenty of Americans are looking to buy. That is pushing up prices. Sales remain below the level reached in 2017 of 5.5 million.
Homes are particularly scarce at lower prices. Sales in the past year have fallen 11% among houses priced below $100,000, which consist mostly of condos. Sales also slipped in the $100,000 to $250,000 price range. They rose in the $250,000 to $1 million range, and fell among homes priced above $1 million.
Odeta Kushi, deputy chief economist at First American Financial, a title insurance company, said those figures indicate that most home sales are occurring among higher-income earners who already own homes and are trading up.
“That leaves the first-time home buyers out of the mix,” she said. NAR’s data showed that in October, first-time buyers made up just 31% of sales, below longer-run averages.
But an increase in the pace of home construction should boost inventory and provide more options for younger buyers, Kushi said. That should support sales in the coming months.
The number of houses under construction increased by 3.8% in October. Builders also secured more permits for single-family home and apartment construction, a good sign for future building.
At the same time, the number of homes on the market fell 2.7% in October from the previous month, leaving just 1.77 million available houses.