December Existing Home Rebound (Finally)
After several months of disappointing numbers, existing home sales finally snapped back in December, the National Association of Realtors reported Friday.
NAR said total existing-home sales jumped by 14.7 percent in December to a seasonally adjusted annual rate of 5.46 million from 4.76 million in November. Sales are now 7.7 percent above a year ago.
Single-family home sales jumped by 16.1 percent to 4.82 million in December from 4.15 million in November, and are now 7.1 percent higher than a year ago (4.50 million). The median existing single-family home price rose $226,000 in December, up 8.0 percent from a year ago. Existing condominium and co-op sales increased by 4.9 percent to 640,000 units in December from 610,000 in November, and are now 12.3 percent above a year ago (570,000 units). The median existing condo price rose to $209,900 in December, 4.9 percent above a year ago.
All regions saw improvement. Existing home sales in the Northeast increased by 8.7 percent to 750,000 and by 11.9 percent from a year ago. The median price in the Northeast rose to $255,700, 5.3 percent above a year ago. In the Midwest, sales jumped 10.9 percent to 1.22 million and by 9.9 percent from a year ago. The median price in the Midwest rose to $171,000, up 7.5 percent from a year ago.
Sales in the South jumped 14.6 percent to 2.27 million in December and by 4.6 percent from a year ago. The median price in the South rose to $196,100, up 6.8 percent from a year ago. Sales in the West jumped by 23.2 percent to 1.22 million and by 8.9 percent from a year ago. The median price in the West rose to $321,100, 8.2 percent above a year ago.
NAR Chief Economist Lawrence Yun said more buyers reached the market before the end of the year, and the delayed closings resulting from the rollout of the Know Before You Owe initiative pushed a portion of November’s would-be transactions into December’s total.
“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” Yun said. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”
“Conditions on the ground have remained strong throughout the apparent lull in sales and run completely counter to the recent turmoil in the financial markets,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Sales have been particularly strong in California, Texas and Florida.”
NAR said the median existing-home price in December rose to $224,100, up 7.6 percent from a year ago ($208,200), marking the 46th consecutive month of year-over-year gains. Total housing inventory at the end of December dropped by 12.3 percent to 1.79 million, 3.8 percent lower than a year ago (1.86 million). Unsold inventory is at a 3.9-month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005.
“Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s 7 percent increase in sales,” Yun said. “In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas.”
NAR said the share of first-time buyers rose to 32 percent in December (matching the highest share since August), up from 30 percent in November and 29 percent a year ago. First-time buyers in all of 2015 represented an average of 30 percent, up from 29 percent in both 2014 and 2013.
The report said all-cash sales fell to 24 percent of transactions in December (27 percent in November) and are down from 26 percent a year ago. Individual investors purchased 15 percent of homes in December, down from both 16 percent in November and 17 percent a year ago. Sixty-four percent of investors paid cash in December.
NAR said properties typically stayed on the market for 58 days in December, an increase from 54 days in November but below 66 days a year ago. Short sales were on the market the longest at a median of 86 days in December, while foreclosures sold in 68 days and non-distressed homes took 57 days. Thirty-two percent of homes sold in December were on the market for less than a month.
Distressed sales declined to 8 percent in December, down from 9 percent in November and 11 percent a year ago. Six percent of December sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in December (15 percent in November), while short sales were discounted 15 percent (unchanged from November).
