Nation’s existing-home sales drop 1.7 percent in November

WASHINGTON — Existing-home sales in the U.S. fell in November, taking a small step back after October’s gains, according to the National Association of Realtors.

The Northeast and Midwest areas of the nation 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 coops) decreased 1.7 percent from October to a seasonally adjusted annual rate of 5.35 million in November. However, sales are up 2.7 percent from a year ago (5.21 million in November 2018).

Lawrence Yun, chief economist for the NAR, 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,” he said.

The median existing-home price for all housing types in October was $271,300, up 5.4 percent 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 at the end of November totaled 1.64 million units, down approximately 7.3 percent from October and 5.7 percent 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 percent decline for homes priced below $100,000 and a 4 percent 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 percent of sales in November, essentially hovering at the 31 percent seen in October and 33 percent in November 2018. The NAR’s 2019 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 33 percent.

Individual investors or second-home buyers, who account for many cash sales, purchased 16 percent of homes in November 2019, up from both 14 percent in October and from 13 percent in November 2018. All-cash sales accounted for 20 percent of transactions in November, about even with 19 percent in October and 21 percent in November 2018.

Distressed sales (foreclosures and short sales) represented 2 percent of sales in November, unchanged from both October 2019 and November 2018.

The NAR recently compiled and released a list of 10 metro areas expected to outperform in terms of demand and price appreciation as a result of their strong job growth, in-migration and affordability.

In alphabetical order, those metro areas are Charleston, South Carolina; Charlotte, North Carolina; Colorado Springs, Colorado; Columbus, Ohio; Dallas-Fort Worth, Texas; Fort Collins, Colorado; Las Vegas, Nevada; Ogden, Utah; Raleigh-Durham-Chapel Hill, North Carolina; and Tampa-St. Petersburg, Florida.

Yun cited the NAR’s recent 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 percent 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,” he said. “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 percent on a year-overyear basis.”

Additionally, the majority of the economists cited in the report — 69 percent — do not anticipate an increase in the federal funds rate, while 31 percent 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 percent and for home prices (existing and new homes) to increase at a slower rate of 3.6 percent.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage increased to 3.70 percent in November, up from 3.69 percent in October. The average commitment rate across all of 2018 was 4.54 percent.

“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 & Company Inc. in San Francisco.

By all accounts, low mortgage rates have propped up buyer interest. SentriLock Foot Traffic Index, a measure of home showings, was stable at 47.1 in November, compared to October. The Realtors Buyer Traffic Index, compiled from a survey of Realtors, was essentially unchanged at 56 from 55 in October and is up from 44 one year ago.

SINGLE-FAMILY, 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 percent from a year ago. The median existing single-family home price was $274,000 in November 2019, up 5.4 percent 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 percent from October and 3.4 percent lower than a year ago. The median existing condo price was $248,200 in November, which is an increase of 4.5 percent from a year ago.