November Existing Home Sales Up Nearly 6%, Inventory Sinks

The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in November jumped by 5.6% to a seasonally adjusted annual rate of 5.81 million from an upwardly revised total of 5.50 million in October. This marks the third consecutive month of sales increases, the strongest pace of growth in nearly 11 years.

The consensus estimate called for sales to reach 5.52 million, according to economists polled by Bloomberg. Total sales in 2016 came in at 5.45 million to surpass 2015’s total of 5.25 million as the most sales since 2006, when 6.48 million homes were sold.

The NAR’s chief economist, Lawrence Yun, said:

Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end, As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.

The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist. Price appreciation is too fast in a lot of markets right now. The increase in homebuilder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.

Housing inventory decreased by 7.2% in November to 1.67 million homes, equal to a supply of 3.4 months, down from 4.0 months in November 2016, and it has fallen year over year for 30 consecutive months. Inventory is down 9.7% from 1.85 million in November 2016.

According to the NAR, the national median existing home price for all housing types in November was $248,000, up 5.8% compared with November 2016, the 69th consecutive month of rising home prices. In October the national median price was $247,000.

The percentage of first-time buyers dropped from 32% in November of 2016 to 29%. For all of 2016, first-time buyers accounted for 35% of sales.

Sales of single-family homes rose 4.5% from the October total of 4.4.87 million to a seasonally adjusted annual rate of 5.09 million and are up 3.2% compared with November 2016. Sales of multifamily homes increased by 14.3% in November to a seasonally adjusted annual rate of 720,000 units.

All homes were on the market for an average of 40 days in November, up month over month by six and down from 43 days in November 2016. Foreclosure (3%) and short (1%) sales accounted for 4% of all November sales, flat with the prior month and down 6% compared with October 2016.

The NAR also reported the following regional data:

  • November existing-home sales in the Northeast jumped 6.7% an annual rate of 800,000 compared with October and are flat with November 2016 sales. The median price in the Northeast was $273,600, up 4% compared with November of last year.
  • In the Midwest, existing-home sales leaped 8.4% to an annual rate of 1.42 million in November and were 6.8% above the November 2016 rate. The median price in the Midwest was $196,100, up 8.8% from a year ago.
  • Existing-home sales in the South rose 8.3% in November to an annual rate of 2.34 million and are now 4% above November 2016 sales. The median price in the South was $216,200, up 4.8% from a year ago.
  • Existing-home sales in the West dropped 2.3% to an annual rate of 1.25 million in November, up 0.8% compared with October 2016 totals. The median price in the West was $375,100, but still up 2.5% compared with the November 2016 median.