Existing-home sales fell in November, taking a small step back after October's gains, according to the National Association of Realtors(R). The Northeast and Midwest both reported growth last month, while the South and West saw sales decline.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.7% from October to a seasonally-adjusted annual rate of 5.35 million in November.
However, sales are up 2.7% from a year ago (5.21 million in November 2018).Lawrence Yun, NAR's chief economist, said the decline in sales for November is not a cause for worry. "Sales will be choppy when inventory levels are low, but the economy is otherwise performing very well with more than 2 million job gains in the past year," said Yun.
The median existing-home price/2 for all housing types in October was $271,300, up 5.4% from November 2018 ($257,400), as prices rose in all regions. November's price increase marks 93 straight months of year-over-year gains.
Total housing inventory/3 at the end of November totaled 1.64 million units, down approximately 7.3% from October and 5.7% from one year ago (1.74 million). Unsold inventory sits at a 3.7-month supply at the current sales pace, down from 3.9 months in October and from the 4.0-month figure recorded in November 2018. Unsold inventory totals have declined for five consecutive months, constraining home sales.
Compared to one year ago, fewer homes were sold below $250,000; with a 16% decline for homes priced below $100,000 and a 4% reduction for homes priced from $100,000 to below $250,000.
"The new home construction seems to be coming to the market, but we are still not seeing the amount of construction needed to solve the housing shortage," Yun said. "It is time for builders to be innovative and creative, possibly incorporating more factory-made modules to make houses affordable rather than building homes all on-site."
Properties typically remained on the market for 38 days in November, seasonally up from 36 days in October, but down from the 42 days in November 2018. Forty-five percent of homes sold in November 2019 were on the market for less than a month.
First-time buyers were responsible for 32% of sales in November, essentially hovering at the 31% seen in October and 33% in November 2018. NAR's 2019 Profile of Home Buyers and Sellers - released in late 2019/4 - revealed that the annual share of first-time buyers was 33%.
Individual investors or second-home buyers, who account for many cash sales, purchased 16% of homes in November 2019, up from both 14% in October and from 13% in November 2018. All-cash sales accounted for 20% of transactions in November, about even with 19% in October and 21% in November 2018.
Distressed sales/5 - foreclosures and short sales - represented 2% of sales in November, unchanged from both October 2019 and November 2018.
NAR recently compiled and released a list of 10 metro areas expected to outperform in terms of demand and price appreciation due to their strong job growth, in-migration and affordability. In alphabetical order, those metro areas are: Charleston S.C.; Charlotte, N.C.; Colorado Springs, Colo.; Columbus, Ohio; Dallas-Fort Worth, Texas; Fort Collins, Colo.; Las Vegas, Nev.; Ogden, Utah; Raleigh-Durham-Chapel Hill, N.C.; and Tampa-St. Petersburg, Fla.
Yun cited last week's NAR Real Estate Forecast Summit, in which 14 leading housing and financial industry economists predicted that the U.S. will likely avoid a recession in 2020 while projecting the economy to grow 2% in the coming year.
"The consensus was that mortgage rates may rise, but only incrementally," Yun said. "I expect to see home price affordability improvements, too. This year we witnessed housing costs grow faster than income, but the expectation is for prices to settle at a more reasonable level in the coming year in line with average hourly wage growth of 3% on a year-over-year basis."
Additionally, the majority of the economists - 69% - did not anticipate an increase in the federal funds rate, while 31% expect the Federal Open Market Committee will lower the rate next year. The group predicted an average annual 30-year fixed mortgage rate of 3.8% and home prices (existing and new homes) to increase at a slower rate of 3.6%.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased to 3.70% in November, up from 3.69% in October. The average commitment rate across all of 2018 was 4.54%.
"I would encourage would-be buyers to take advantage of historically-low mortgage rates, which make a home purchase more affordable, particularly when home prices are rising," said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, California.
By all accounts, low mortgage rates have propped up buyer interest. SentriLock Foot Traffic Index,/6 a measure of home showings, was stable at 47.1 in November compared to October. The Realtors(R) Buyer Traffic Index compiled from a survey of Realtors(R) was essentially unchanged at 56 from 55 in October and is up from 44 one year ago.
Single-family and Condo/Co-op Sales
Single-family home sales sat at a seasonally-adjusted annual rate of 4.79 million in November, down from 4.85 million in October, but up 3.5% from a year ago. The median existing single-family home price was $274,000 in November 2019, up 5.4% from November 2018.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 560,000 units in November, down 5.1% from October and 3.4% lower than a year ago. The median existing condo price was $248,200 in November, which is an increase of 4.5% from a year ago.
Compared to last month, November sales increased in the Northeast and Midwest regions, while year-over-year sales are up in all regions except the Northeast. Median home prices in all regions increased from one year ago, with the West region showing the strongest price gain.
November 2019 existing-home sales in the Northeast grew 1.4% to an annual rate of 700,000, down 1.4% from a year ago. The median price in the Northeast was $301,700, up 3.9% from November 2018.
Existing-home sales increased at the strongest pace in the Midwest at 2.3% to an annual rate of 1.32 million, up 1.5% from a year ago. The median price in the Midwest was $209,700, a 5.9% jump from last November.
Existing-home sales in the South dropped 3.9% to an annual rate of 2.24 million in October, but were up 3.7% from a year ago. The median price in the South was $234,400, a 4.8% increase from this time last year.
Existing-home sales in the West declined 3.5% to an annual rate of 1.09 million in November, but are up 4.8% from a year ago. The median price in the West was $410,700, up 7.1% from November 2018.
The National Association of Realtors(R) is America's largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.
1/ Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample - about 40% of multiple listing service data each month - and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2/ The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR's quarterly metro area price reports.
3/ Total inventory and month's supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).
4/ Survey results represent owner-occupants and differ from separately reported monthly findings from NAR's Realtors(R) Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5/ Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR's Realtors(R) Confidence Index, posted at nar.realtor.
6/ The SentriLock Foot Traffic index is calculated from the number of home showings by Realtors(R). Every month, SentriLock LLC sends NAR the number of home showings in about 180 boards. Home showings reflect the number of properties that were viewed and the number of views per property during a month. Boards with an increase in showings are given a value of 100, a value of 50 if no change, and a value of 0 if showings declined. A value above 50 means more boards reported an increase in home showings in the reference month compared to one year ago than boards who reported fewer showings.