Existing-home sales fell last month as housing supply showed signs of tightening, according to the National Association of REALTORS®' latest housing report. Sales activity was choppy throughout the country, with all regions posting declines compared to a month earlier, NAR noted.
"Fewer people bought homes last month despite interest rates being at their lowest levels of the year," says Lawrence Yun, NAR's chief economist. "The stock market swings in October may have impacted some consumers' psyche and, therefore, led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market."
Existing-home sales, which reflects single-family homes, townhomes, condos, and co-op sales, dropped 6.1 percent in November to a seasonally adjusted annual rate of 4.93 million. Sales are at their lowest annual pace since May. However, sales remain above year-over-year levels, up 2.1 percent compared to November 2013.
5 Stats to Gauge the Market
Here's an overview of the latest housing data from NAR's November report:
- Home prices: The median price of an existing home for all housing types was $205,300 in November, which is 5 percent higher than a year ago. November marked the 33rd consecutive month of year-over-year price gains.
- Single-family home and condo sales: Single-family home sales fell 6.3 percent to a seasonally adjusted annual rate of 4.33 million in November, down from 4.62 million in October. However, they remain 2.4 percent above the 4.23 million pace a year ago. Existing condominium and co-op sales fell 4.8 percent to a seasonally adjusted annual rate of 600,000 units in November, unchanged from a year ago.
- Inventory levels: Housing inventory dropped 6.7 percent at the end of November to 2.09 million existing homes available for sale. That represents a 5.1-month supply at the current sales pace, which is unchanged from last month. Still, unsold inventory remains 2 percent higher than a year ago. "Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year's promising job growth," says Yun. "Much faster price and rent appreciation — easily exceeding wage growth — will occur next year unless new construction picks up measurably."
- First-time buyers: The share of first-time buyers rose to 31 percent in November, marking the highest share since October 2012. First-time buyers have averaged a 29 percent market share through most of this year. Fannie Mae and Freddie Mac's new low-down-payment program, offering 3 percent down-payment loans, likely will improve access to credit for first-time buyers, says NAR President Chris Polychron. "The new program mitigates risk with strong underwriting and ensures that responsible buyers have access to safe and affordable mortgage credit," Polychron says. "Furthermore, NAR believes lenders must do their part to ensure loans are prudently underwritten and are made available to qualified borrowers."
- Distressed sales: Foreclosures and short sales were mostly unchanged in November from October, remaining at 9 percent. Distressed sales made up 14 percent of all sales a year ago. Broken out in November, 6 percent of sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in November, while short sales were discounted 13 percent.
Here's an overview of how existing-home sales performed across the country in November:
- Northeast: Dropped 4.2 percent to an annual rate of 680,000 but remain 4.6 percent above a year ago. Median price: $246,100, 1.3 percent above a year ago.
- Midwest: Fell 8.9 percent to an annual rate of 1.13 million and are 1.7 percent below November 2013. Median price: $160,500, up 7 percent from a year ago
- South: Decreased 3.2 percent to an annual rate of 2.09 million but remain 5 percent above November 2013. Median price: $176,500, up 5.2 percent from a year ago
- West: Fell 9.6 percent to an annual rate of 1.03 million but are 1 percent below a year ago. Median price: $292,700, 3.5 percent above November 2013