Existing property sales in the US rose in October for the first time in seven months, suggesting that demand is stabilising at a lower level as available properties become less scarce.
According to the National Association of Realtors (NAR), existing property sales contracts closing rose on a monthly basis to 5.22 million, exceeding the 5.2 million prediction of economists.
The median sales price of existing property rose 3.8 per cent from a year earlier, while the inventory of available homes expanded 2.8 per cent, the third straight increase.
However, on an annual basis sales were down by 5.1 per cent from October 2017, proving that the market still has some way to go.
The US existing property market has been hit by higher interest rates and a scarcity of available property causing prices to continue rising. Residential investment now accounts for about 3.9 per cent of the US economy.
US Federal Reserve officials are still projected to raise interest rates in December for the fourth time this year and continue tightening in 2019, as consumer spending is seen remaining solid. Overseas property investors relying on US mortgages may wish to fix rates if they can.
NAR chief economist Lawrence Yun has urged the Fed to avoid raising interest rates again, saying ‘Demand is being choked off’ by higher borrowing costs.
Existing property purchases rose in three of the four regions: The North-east, South and West recorded increases, while sales declined in the Mid-west.
However, sales declined in both the under $100,000 and $100-250,000 categories, while they rose in the over $250,000 category.
The monthly increase was more pronounced in condominium and co-op units, which were up 5.3 per cent to 600,000. Sales of single-family homes rose 0.9 per cent.
At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, significantly below the five-month supply mark that realtors consider consistent with a tight market.