USA existing home sales hit 2016 record despite December slide
- Author: Ronnie Bowen Jan 25, 2017,
Jan 25, 2017, 10:57
The National Association of Realtors said Tuesday that sales of existing homes fell 2.8% last month to a seasonally adjusted annual rate of 5.49 million. It was the highest figure since 2006, when 6.48 million total existing homes were sold, the NAR said. In addition to the lack of properties to purchase, rising home prices and mortgage rates also likely sidelined some buyers last month.
Regionally, existing sales in December were running modestly ahead of the pace a year earlier in all regions, except the West region, where year over year sales were down by 1.6 percent. The median sales price in December was $232,200, up 4.0% compared to a year ago. At the current sales pace, there were 3.6 months' worth of available homes in December.
Economic analyst Geoffrey Hewings with the University of IL says a lack of inventory kept home sales from going even higher.
Last month, the number of homes on the market fell 10.8 percent from November to 1.65 million units, the lowest level since December 1999. Indeed, inventory levels have slipped for 19 straight months now, to a supply of just 3.6 months. The NAR estimates housing starts and completions should be in a 1.5 million to 1.6 million range to alleviate the chronic shortage.
Homebuyers were able to manage the rising sales prices in part because of low mortgage rates in 2016, but those rates have climbed upward and settled above 4 percent since Donald Trump's presidential victory. Although December sales were sluggish, he said he was encouraged that for all of 2016 home sales increased 4.3 percent for the Chicago area.
Existing-home sales are based on transaction closings from MLSs and include single-family homes, townhomes, condominiums and co-ops.
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The recent drop in home sales comes after a three month increase, so experts aren't too concerned about the latest numbers.
Commerce Department figures released last week, however, showed that new home construction had rocketed 11 percent. He thinks sales will increase moderately - 2.4 to 3.3 percent.
"After beating expectations in September, October and November, reality finally caught up with existing homes sales in December", Zillow Chief Economist Svenja Gudell said. Joel Naroff, president and founder of Naroff Economic Advisors, says it is more of a sign that there are less homes to be bought. The median price had been $200,000 in December 2015.
Homebuilding is now running just above a 1.2 million-unit rate.
At the same time, the fixed 30-year mortgage rate increased 43 basis points in December from November to an average of 4.20 percent, according to data from mortgage finance firm Freddie Mac.