U.S. home resales rose in October to their highest level in more than 9-1/2 years as homebuyers, buoyed by an improving labor market, took advantage of still-low mortgage rates to snatch up properties after many were shut out during the busy summer selling season.
The jump in sales was further evidence of a pickup in economic growth early in the fourth quarter.
“You have to be pretty confident to buy a house,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “Consumers certainly were in October, showing no hesitation whatsoever ahead of the presidential elections with its often harsh rhetoric and focus on all the things wrong with the economy.”
While a recent surge in mortgage rates could hurt the housing market next year, the impact is likely to be modest given a labor market that is at or close to full employment.
The National Association of Realtors said on Tuesday existing home sales rose 2.0 percent to an annual rate of 5.6 million units last month, the highest level since February 2007.
The Realtors group attributed the rise in sales to “unrealized pent-up demand.” Tight supply over summer unleashed bidding wars, which pushed out some would-be buyers. Opportunities for buyers during the autumn and winter months, usually quiet periods for home sales, are likely improving.
New listings last month typically stayed on the market for 41 days, up from 39 days in September, but down from 57 days a year ago. Economists had forecast sales slipping 0.5 percent to a 5.43 million-unit pace in October. Sales were up 5.9 percent from a year ago. They rose in all four regions last month.
The report came on the heels of data last week showing a surge in housing starts. It also added to strong reports on retail sales and the labor market as well as improving manufacturing surveys in suggesting that the economy continued to gain speed early in the fourth quarter.
Rising homes sales suggest an increase in brokers’ commission, which should boost the residential construction component in the government’s gross domestic product report.