Sales of previously owned U.S. homes retreated in October from the second-highest level since 2007 as lean inventory limited momentum in residential real estate.
Closings, which usually take place a month or two after a contract is signed, dropped 3.4 percent to a 5.36 million annual rate, the National Association of Realtors reported Monday. Prices increased compared with October 2014 as the number of dwellings on the market decreased.
A limited supply of available properties, particularly more affordable homes, has made for a slow and steady recovery in residential real estate. At the same time, steady employment growth, rising rents and low borrowing costs are bolstering prospects for the market.
“Unless supply catches up, there will still be problems on the price side,” said Xiao Cui, an economist at Credit Suisse in New York. “We think that job growth and earnings growth have been promising this year and should help affordability.”
The median forecast of 71 economists surveyed by Bloomberg called for sales at a 5.4 million annual rate. Estimates ranged from 5.09 million to 5.6 million. September’s pace was unrevised at 5.55 million, the second-fastest rate since February 2007.
Compared with a year earlier, purchases increased 0.9 percent in October before adjusting for seasonal variations.
The median price of an existing home rose 5.8 percent from October 2014 to $219,600. The appreciation was led by an 8 percent year-to-year advance in the West.
Prices have been bolstered by a dearth of supply on the market. The number of previously owned homes for sale dropped 2.3 percent in October from a month earlier to 2.14 million, the fewest since March.
Purchases declined in three of four regions, led by an 8.7 percent drop in the West, the Realtors’ data show. They were unchanged in the Northeast.