WASHINGTON (AP) — Americans bought more homes last month, as sales snapped back in hurricane-hit Texas and Florida. Yet the market is still suffering from a dwindling supply of available homes.
Sales rose 2 percent in October to a seasonally adjusted annual rate of 5.48 million, the National Association of Realtors said Tuesday. That's the fastest pace since June.
Still, sales have slipped 0.9 percent from a year ago. The number of available homes has fallen 10.4 percent from a year earlier to just 1.8 million. That's the lowest for any October since the Realtors began tracking the data in 1999.
The tight supply is pushing up prices and thwarting many would-be home buyers. The median home price jumped 5.5 percent in October from a year earlier. And homes were on the market for just 34 days, down from 41 a year ago.
The supply crunch is particularly acute among lower-priced homes. Builders are putting up more expensive houses to maximize profits.
"Selection is slim across the board, driving up prices, but even more so for those seeking less expensive and entry-level homes," Svenja Gudell, chief economist at Zillow, said. "Currently, roughly half of what's available to buy is priced in the upper one-third of home values, leaving scant options for those aging millennials and young families trying to get their foot in the door."
Buyers closed more deals in Houston, Orlando and Jacksonville, Florida, as well as other areas damaged by Hurricanes Harvey and Irma, NAR chief economist Lawrence Yun said. Sales were still recovering in Miami and other areas in south Florida.
Steady hiring and still-low mortgage rates are boosting demand, spurring healthy traffic at open houses, Yun said.
Yet many Americans are reluctant to sell their houses with so few alternatives available, which perpetuates the cycle of low inventory. Home builders will have to step up construction to relieve the supply crunch, economists say.
Home construction jumped nearly 14 percent last month as building activity recovered from the hurricanes. But construction rose just 2.4 percent from a year ago. That's not nearly enough to offset the decline in existing homes for sale.
The number of homes for sale has fallen more than 200,000 in the past year. Yet homebuilders started work on just 75,000 single-family homes last month.
With the unemployment rate at a 17-year low, builders complain that they can't find enough workers to start more projects. Many also say that zoning rules in some cities limit the amount of available land.