U.S. home sales increase in October

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More people closed deals on home purchases last month than was expected by economists, driving down the number of homes available for sale to an eight-month supply.

Sales rose 1.4% from the prior month, and 13.5% above the same month a year earlier. Each month, the National Assn. of Realtors reports the figures in the form of an annual sales pace adjusted for seasonal variations. Last month’s pace was 4.97 million, the group reported.

With the increase in sales last month, the number of homes on the market continued to decrease, which real estate agents view as a positive sign for their business because fewer homes on the market drives prices up and increases commissions. Less supply on the market, however, also means fewer options and increased competition for consumers looking to purchase a property.

U.S. housing inventory at the end of October fell 2.2% to 3.33 million previously owned homes available for sale, which represents an eight-month supply at last month’s sales pace. A big chunk of the homes selling these days are bank-owned homes, so the housing supply could increase if new foreclosure actions continue to pick up.

The median price paid for all types of previously owned homes -– houses, condominiums, town homes -– was $162,500 last month, which was a 4.7% decline from October 2010. The share of so-called distressed homes -– foreclosures and short sales -– made up 28% of the market last month.

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-- Alejandro Lazo
Twitter.com/alejandrolazo