Previously Owned Home Sales Climb to Highest Since Early 2007
Sales of previously owned U.S. homes unexpectedly increased in November to the strongest level since early 2007, ahead of a jump in borrowing costs, National Association of Realtors data showed Dec. 21.
Key Points
• Contract closings rose 0.7% to a 5.61 million annual rate (forecast was 5.50 million), that fastest pace since February 2007.
• Sales increased 18.2% before seasonal adjustment from November 2015, when changes in mortgage regulations delayed closings.
• Median sales price climbed 6.8% from November 2015 to $234,900.
• Inventory of available properties dropped 9.3% from November 2015 to 1.85 million, marking the 18th consecutive year-over-year decline.
Big Picture
Sales have kept chugging along in the industry’s quieter selling season, buoyed by consistent job gains as well as increases in consumer and business optimism reflecting expectations that President-elect Donald Trump will relax burdensome regulations. Mortgage rates at more than two-year highs could make it difficult for some borrowers to qualify for a loan, while limited inventory, partly due to scarcities of skilled labor and available lots in the new-home market, keeps property prices elevated.
Economist Takeaways
“People who had locked in their rate” followed through with their purchases last month, Lawrence Yun, chief economist at the Realtors group in Washington, told reporters as the data were released. Still, “we have this inventory shortage, this housing shortage, for the past five years, hurting affordability for first-time buyers.”
“Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017,” Yun said in a statement. “Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country.”
The Details
• Sales picked up in two of four regions, including an 8% gain in the Northeast and a 1.4% advance in the South.
• At the current pace, it would take 4 months to sell the houses on the market, the shortest span since January; the realtors group considers less than a 5 months’ supply a tight market.
• Single-family home sales decreased 0.4% to an annual rate of 4.95 million.
• Purchases of condominium and co-op units climbed 10% to a 660,000 pace, the fastest since May 2007.
• First-time buyers accounted for 32% of all sales, compared with 33% in the prior month.
• Homes sold in 43 days, down from 54 days a year earlier.
• 42% of homes sold in November were on market for less than a month.
