November Existing Home Sales Maintain Strong Momentum

Existing home sales surged for the third straight month in November to their strongest pace in more than a decade, the National Association of Realtors said yesterday.

NAR said total existing home sales jumped by 5.6 percent 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 percent higher than a year ago and are at their strongest pace since December 2006 (6.42 million).

The report said single-family home sales rose by 4.5 percent to a seasonally adjusted annual rate of 5.09 million in November from 4.87 million in October and by 3.2 percent from a year ago (4.93 million). The median existing single-family home price rose to $248,800 in November, up 5.4 percent from a year ago.

Existing condominium and co-op sales increased by 14.3 percent to a seasonally adjusted annual rate of 720,000 units in November and by 7.5 percent above a year ago. The median existing condo price rose to $242,500 in November, 8.8 percent above a year ago.

Regionally, only the West, which continues to see acute inventory shortages, saw a decline in activity. Sales in the West declined by 2.3 percent to an annual rate of 1.25 million in November, but improved by 2.5 percent from a year ago. The median price in the West rose to $375,100, up 8.2 percent from a year ago.

Sales in the South rose by 8.3 percent to an annual rate of 2.34 million in November and by 4.0 percent from a year ago. The median price in the South rose to $216,200, up 4.8 percent from a year ago. Sales in the Northeast rose by 6.7 percent to 800,000 and were unchanged from a year ago. The median price in the Northeast rose to $273,600, 4.0 percent higher than a year ago. In the Midwest, sales jumped by 8.4 percent to an annual rate of 1.42 million in November and by 6.8 percent from a year ago. The median price in the Midwest rose to $196,100, up 8.8 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, noted existing home sales have risen in each of the past three months, following a lull earlier this year. Moreover, sales for October were also revised higher and now show a gain of 2.4 percent versus the first reported 2 percent gain.

“Nearly every housing indicator has improved this past month, including housing starts and homebuilder confidence–the latter has risen to its highest level since July 1999 and has been driven higher by a surge in buyer traffic,” Vitner said. “Existing homes are also garnering more buyer interest. The increase in buyers is also consistent with the stronger run of growth the economy has seen in recent months. Real GDP growth has risen at a better-than 3 percent pace the past two quarters, job growth remains solid and the unemployment rate has fallen to just 4.1 percent. When you add in the booming stock market and surging consumer confidence, all systems appear to be a go for liftoff to a more meaningful housing recovery.”

Vitner said buyer traffic may also have gotten an assist from some temporary factors, including some catch-up from closings that were delayed by the hurricanes earlier this year. “Milder fall weather and possibly even the drop-off in NFL viewership at the start of the football season may have contributed to the recent surge in closings, which reflect contracts written in September and October,” he said.

NAR 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,” he said. “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 report said the median existing-home price for all housing types in November rose to $248,000, up 5.8 percent from a year ago ($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 by 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent 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,” Yun said. “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.”

NAR said first-time buyers represented 29 percent of sales in November, down from 32 percent both in October and a year ago. All-cash sales rose to 22 percent of transactions in November, up from 20 percent in October and 21 percent a year ago. Individual investors purchased 14 percent of homes in November, up from 13 percent last month and unchanged from a year ago.

The report said properties typically stayed on the market for 40 days in November, 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.

Distressed sales represented 4 percent of sales for the fourth straight month in November, down from 6 percent a year ago. Three percent of November sales were foreclosures; 1 percent were short sales.