Potential existing-home sales increased to a 6.27 million seasonally adjusted annualized rate (SAAR), a 0.1% month-over-month increase, according to First American’s proprietary Potential Home Sales Model for the month of October 2021. 

First American says this represents a 79.8% increase from the market potential low point reached in February 1993. 

Currently, potential existing-home sales is 522,000 million (SAAR), or 7.7% below the pre-recession peak of market potential, which occurred in April 2006.

The market potential for existing-home sales increased 10.3% compared with a year ago, a gain of nearly 584,000 (SAAR) sales. 

“In September 2021, existing-home sales increased to a 6.29 million seasonally adjusted annualized rate (SAAR). Prior to the pandemic, the housing market had not reached this sales pace since 2006,” said Mark Fleming, chief economist at First American. “We may see another strong month in October, as housing market potential increased 10.3% compared with one year ago to 6.27 million (SAAR), according to our measure of the market potential for existing-home sales.”

Lack of inventory is still driving the system down, according to the researchers. People are living in their homes longer, rising to approximately 10.7 years in October, up from 10.4 years one year ago. This means fewer people are listing their homes for sale, compounding the housing supply shortage.

“In 2022, the average length of time someone lives in their home appears poised to rise again, especially as mortgage rates increase, which will prolong the housing supply shortage and dampen housing market potential. The labor market recovery is expected to continue, putting upward pressure on wages, helping consumer house-buying power. Yet, the improving economy is also likely to put upward pressure on mortgage rates,” said Fleming. “The winner of the tug-of-war between rising rates and higher household income will determine the direction of house-buying power. But, even if rising rates outpace the impact of higher incomes, buying a home is more than a financial calculation. Millennials are widely expected to continue to form households, boosting demand for homes. Strong demographic demand will continue to act as the wind in the housing market’s sails.”

NEXT Mortgage News logo

Stay in the know

Get the daily intel that impacts your customers, employees and market. 

Up NEXT eNewsletter — Industry news

Thank you!

Share This