A big surge in the Northeast and a smaller gain in the South pushed existing-home sales up in November for the third consecutive month, according to the National Association of Realtors.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.7 percent to a seasonally adjusted annual rate of 5.61 million in November from a downwardly revised 5.57 million in October. November’s sales pace is now the highest since February 2007 (5.79 million) and is 15.4 percent higher than a year ago (4.86 million).
Lawrence Yun, NAR chief economist, says it’s been an outstanding three-month stretch for the housing market as 2016 nears the finish line.
“The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months,” he says. “Furthermore, it’s no coincidence that home shoppers in the Northeast – where price growth has been tame all year – had the most success last month.”
The median existing-home price for all housing types in November was $234,900, up 6.8 percent from November 2015 ($220,000). November’s price increase marks the 57th consecutive month of year-over-year gains.
Total housing inventory at the end of November dropped 8.0 percent to 1.85 million existing homes available for sale, and is now 9.3 percent lower than a year ago (2.04 million) and has fallen year-over-year for 18 straight months. Unsold inventory is at a 4.0-month supply at the current sales pace, which is down from 4.3 months in October.
“Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017,” adds Yun. “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 average commitment rate for a 30-year, conventional, fixed-rate mortgage leaped to 3.77 percent in November from 3.47 percent in October (highest rate since January at 3.87 percent), according to Freddie Mac. The average commitment rate for all of 2015 was 3.85 percent.
First-time buyers were 32 percent of sales in November, which is down from 33 percent in October but up from 30 percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in November – revealed that the annual share of first-time buyers was 35 percent (32 percent in 2015), which is the highest since 2013 (38 percent).
“First-time buyers in higher priced cities will be most affected by rising prices and mortgage rates next year and will likely have to stretch their budget or make compromises on home size, price or location,” Yun says.
Properties typically stayed on the market for 43 days in November, up from 41 days in October but down 54 days last year. Short sales were on the market the longest at a median of 110 days in November, while foreclosures sold in 55 days and non-distressed homes took 41 days. Forty-two percent of homes sold were on the market for less than a month.
NAR President William E. Brown, a Realtor from Alamo, California, says consumers looking to buy in 2017 should find a Realtor, seek a preapproval from a lender and start their home search now. “It’s never too early to begin viewing listings online and in person with a Realtor to identify what’s available within the budget and where,” says Brown. “There are fewer available homes during the winter months but also fewer buyers. With mortgage rates and prices expected to increase as the year goes on, the first few months of 2017 could be an opportune time close on a home.”
All-cash sales were 21 percent of transactions in November, down from 22 percent in October and 27 percent a year ago. Individual investors, who account for many cash sales, purchased 12 percent of homes in November, down from 13 percent in October and 16 percent a year ago. Fifty-eight percent of investors paid in cash in November, which matches the lowest share since August 2009.
Distressed sales – foreclosures and short sales – rose to 6 percent in November, up from 5 percent in October but down from 9 percent a year ago. Four percent of November sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in November (18 percent in October), while short sales were discounted 16 percent (unchanged from October).
Single-family sales
Single-family home sales declined 0.4 percent to a seasonally adjusted annual rate of 4.95 million in November from 4.97 million in October, but are still 16.2 percent above the 4.26 million pace a year ago. The median existing single-family home price was $236,500 in November, up 6.8 percent from November 2015.
Existing condominium and co-op sales jumped 10.0 percent to a seasonally adjusted annual rate of 660,000 units in November, and are now 10.0 percent above a year ago. The median existing condo price was $222,600 in November, down 5.8 percent from 2015.
Regional breakdown
November existing-home sales in the Northeast hiked 8.0 percent to an annual rate of 810,000, and are now 15.7 percent above a year ago. The median price in the Northeast was $263,000, which is 3.3 percent above November 2015.
In the Midwest, existing-home sales decreased 2.2 percent to an annual rate of 1.33 million in November, but are still 18.8 percent above a year ago. The median price in the Midwest was $180,300, up 6.5 percent from a year ago.
Existing-home sales in the South in November rose 1.4 percent to an annual rate of 2.22 million, and are now 11.6 percent above November 2015. The median price in the South was $206,900, up 9.2 percent from a year ago.
Existing-home sales in the West declined 1.6 percent to an annual rate of 1.25 million in November, but are still 19.0 percent higher than a year ago. The median price in the West was $345,400, up 8.5 percent from November 2015.
Source: NAR