The continued low inventory was visible in last week's Existing Home Sales report. The National Association of Realtors (NAR) reported that sales of Existing Homes decreased by 5.9% this past month, and 28.4% lower than October 2021. For the third consecutive month, the number of available homes fell. We're currently looking at about a 2.5-month supply of homes and, while this tight supply isn't great for would-be buyers, it is very supportive of appreciation for home owners. Keep in mind that, in a normal market, there is about a 6-month supply.
It's true that some homes are sitting on the market a little longer than the current average, but homes that are priced correctly move quickly. About 64% of homes are on the market for less than 30 days. With this, we'll bang the Pre-Approval Drum again. It is so important to get pre-approved before shopping. Borrowers put off getting pre-approved are letting homes slip through their fingers!
In New Construction news, we saw a decline in housing starts for single-family homes of 4.2% in October and they are down 20.8% compared to October 2021. It seems that builders are being cautious, having learned a lesson in 2007, and do not want to build an over-supply of houses. The question is, when will they find the middle ground and supply the homes that are in such high demand?
You have likely heard the news about the decline in Produce Price Index (PPI), which was reported last week. We don't want to get ahead of ourselves, but we may begin to see inflation start to cool off! Since inflation is calculated on an annual basis, if we see some moderated reports over the next few months, we will see the overall inflation numbers fall.
Core PPI, which strips out food and energy prices, came in flat last month. On an annual basis, however, it decreased! Core PPI fell from 7.2% to 6.7% since October 2021.
Next week, we'll be bringing you some important economic news that will be reported today. Stay tuned for a breakdown of New Home Sales and the minutes from the Fed's meeting earlier this month.