Existing-home sales increased 0.7 percent to 5.61 million in November, reports the National Association of REALTORS® (NAR), up from 5.57 million in October—reversing the typical trend toward a slowdown at this time of year. The November numbers, up 15.4 percent from last November, mark the highest sales pace since February 2007. The upward pull, according to the report, was driven primarily by activity in the Northeast, which grew 8.0 percent to 810,000.
“The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months,” says Lawrence Yun, NAR chief economist. “Furthermore, it’s no coincidence that home shoppers in the Northeast—where price growth has been tame all year—had the most success last month.”
“With the holidays around the corner and weather getting frosty in much of the country, November is typically the slowest month of the fall,” says Jonathan Smoke, realtor.com® chief economist, “but this year it was abnormally strong. Last month, we saw the highest level of sales for November since 2006, and there was more buyer and seller traffic than there was in October.”
Last month, the median existing-home price was $234,900, up 6.8 percent from last year ($220,000). Total housing inventory, meanwhile, dropped 8.0 percent to 1.85 million—now 9.3 percent lower than a year ago (2.04 million). Unsold inventory is at a 4.0-month supply at the current sales pace, which is down from 4.3 months in October.
“Consumers should be aware that the overall supply of homes for sale remains very low, and pent-up demand is leading to large jumps in price acceleration,” says Smoke. “The number of homes for sale is down 11 percent compared to a year ago, and median prices are up 7 percent. On top of that, December is tracking to an even bigger decline.”
“Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017,” says Yun. “Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage leaped to 3.77 percent in November from 3.47 percent in October (highest rate since January at 3.87 percent). The average commitment rate for all of 2015 was 3.85 percent.
“Buyers planning to purchase in 2017 will contend with even more limited supply while they also race against the prospect of mortgage rates reaching levels we have not seen since 2010,” Smoke says. “The good news is that rates are rising because of continued economic growth, and many households should see income gains in 2017. However, those gains are not likely to be higher than the combined effect of higher prices and higher mortgage rates.”
“First-time buyers in higher-priced cities will be most affected by rising prices and mortgage rates next year and will likely have to stretch their budget …read more
From:: Finance and Economy