Economic Snapshot: Existing home sales fall hard in November
Existing home sales dropped to their slowest pace in the past 19 months in November. Prices continue to rise for the 45th month in a row, making it more difficult for first-time buyers to enter the market.
Total existing home sales fell 10.5 percent to a seasonally adjusted annual rate of 4.76 million in November, the lowest rate since April 2014 at 4.75 million. Last month’s decline in existing home sales was the largest since 2010 at 22.5 percent.
Sales are now 3.8 percent lower than the previous year, marking the first year-over-year decrease since September 2014.
“Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” said Lawrence Yun, National Association of Realtor’s chief economist. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.”
The median existing home price for all housing types was $22,300 in November, which is 6.3 percent above November 2014. This is the 45th consecutive month of YOY price gains.
Total housing inventory at the end of November decreased 3.3 percent to 2.04 million existing homes available for sale. This is 1.9 percent lower than the previous year. Unsold inventory is at a rate of 5.1 months at the current sales pace, up from 4.8 months in October but still well below the 6-month rate where housing should be.
The percent share of first-time buyers was 30 percent in November, down from 31 percent both in October and November 2014. Despite first-time buyers’ continued absence from the market, NAR’s inaugural quarterly Housing Opportunities and Market Experience survey — released earlier this month — found that an overwhelming majority of current renters, 94 percent, who are 34 years of age or younger want to own a home in the future. The top reason given by renters for not currently owning was affordability.
“A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently underperforming share of first-time buyers than the idea that buying a home is not as desirable as it used to be,” said Yun in the survey.
New home sales
Sales of new single-family houses were at a seasonally adjusted annual rate of 490,000 in November. This is 4.3 percent above the revised October rate of 470,000 and is 9.1 percent above the November 2014 estimate of 449,000.
The median sales price of new houses sold in November was $305,000 and the average sales price was $374,900. The seasonally adjusted estimate of new houses for sale at the end of November was 232,000, which represents a supply of 5.7 months at the current sales rate.
