Existing-Home Sales Surge in November
Tuesday, January 2, 2018
Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years, the National Association of Realtors (NAR) reported Wednesday.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.6% to a seasonally-adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. After last month’s increase, sales are 3.8% higher than a year ago and are at their strongest pace since December 2006 (6.42 million).
|Housing Snapshot (PRNewsfoto/NAR)|
November existing-home sales in the Northeast leaped 6.7% to an annual rate of 800,000, (unchanged from a year ago). The median price in the Northeast was $273,600, which is 4.0% above November 2016. In the Midwest, existing-home sales jumped 8.4% to an annual rate of 1.42 million in November, and are now 6.8% above a year ago.
The median price in the Midwest was $196,100, up 8.8% from a year ago. Existing-home sales in the South expanded 8.3% to an annual rate of 2.34 million in November, and are now 4.0% higher than a year ago. The median price in the South was $216,200, up 4.8% from a year ago.
Existing-home sales in the West declined 2.3% to an annual rate of 1.25 million in November, but are still 2.5% above a year ago. The median price in the West was $375,100, up 8.2% from November 2016.
Lawrence Yun, NAR chief economist, said home sales in most of the country expanded at a tremendous clip in November. “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,” he said.
“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 median existing-home price for all housing types in November was $248,000, up 5.8% from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains.
Total housing inventory at the end of November dropped 7.2% to 1.67 million existing homes available for sale, and is now 9.7% lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.
“The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” said Yun. “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.”
First-time buyers were 29% of sales in November, which is down from 32% both in October and a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released earlier this year5– revealed that the annual share of first-time buyers was 34%.
Matching the highest share since May, all-cash sales were 22% of transactions in November, which is up from 20% in October and 21% a year ago. Individual investors, who account for many cash sales, purchased 14% of homes in November, up from 13% last month and unchanged from a year ago.
“The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” said Yun. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.”
Properties typically stayed on the market for 40 days in November, which is up from 34 days in October but down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.
Realtor.com revealed that the hottest metro areas in November were San Jose-Sunnyvale-Santa Clara, Calif.; Vallejo-Fairfield, Calif.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Stockton-Lodi, Calif.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage increased for the second straight month to 3.92% in November from 3.90% in October. The average commitment rate for all of 2016 was 3.65%.
On the topic of tax reform, NAR president Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty, says it’s good news homeowners can continue to count on tax incentives such as the mortgage interest deduction and the state and local tax deduction.
“Only 6% of homeowners have mortgages exceeding $750,000, and only 5% pay more than $10,000 in property taxes, but most homeowners won’t itemize under the new regime,” she said. “While we’re pleased that important homeownership incentives such as the capital gains exclusion survived in conference, additional changes are required to truly incentivize homeownership in the tax code.”
Distressed sales – foreclosures and short sales – were 4% of sales for the fourth straight month in November, and are down from 6% a year ago. Three percent of November sales were foreclosures and 1% were short sales.
Single-family home sales grew 4.5% to a seasonally-adjusted annual rate of 5.09 million in November from 4.87 million in October, and are now 3.2% above the 4.93 million pace a year ago. The median existing single-family home price was $248,800 in November, up 5.4% from November 2016.
Existing condominium and co-op sales increased 14.3% to a seasonally adjusted annual rate of 720,000 units in November, and are now 7.5% above a year ago. The median existing condo price was $242,500 in November, which is 8.8% above a year ago.