Surge in Northeast Boosts US Home Sales in November

Real Estate In-Depth | December 2016

WASHINGTON—A large home sales surge in the Northeast and a smaller gain in the South pushed existing-home sales up for the third consecutive month in November, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.7% to a seasonally adjusted annual rate of 5.61 million in November from a downwardly revised 5.57 million in October. November’s sales pace is now the highest since February 2007 (5.79 million) and is 15.4% higher than a year ago (4.86 million). Home sales in the Northeast rose 8% from October’s sales levels.

Lawrence Yun, NAR, Chief Economist
Lawrence Yun, NAR, Chief Economist

Lawrence Yun, NAR chief economist, says it’s been an outstanding three-month stretch for the housing market as 2016 nears the finish line. “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,” he said. “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.”

The median existing-home price for all housing types in November was $234,900, up 6.8% from November 2015 ($220,000). November’s price increase marks the 57th consecutive month of year-over-year gains.

Total housing inventory at the end of November dropped 8.0% to 1.85 million existing homes available for sale, and is now 9.3% lower than a year ago (2.04 million) and has fallen year-over-year for 18 straight months. Unsold inventory is at a 4.0-month supply at the current sales pace, which is down from 4.3 months in October.

“Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017,” added 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% in November from 3.47% in October (highest rate since January at 3.87%). The average commitment rate for all of 2015 was 3.85%. The average commitment rate for a 30-year conventional fixed-rate mortgage has since jumped considerably to 4.30% as of Dec. 18.

First-time buyers were 32% of sales in November, which was down from 33% in October but up from 30% a year ago. NAR’s 2016 Profile of Home Buyers and Sellers— released in November—revealed that the annual share of first-time buyers was 35% (32% in 2015), which is the highest since 2013 (38%).

“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 or make compromises on home size, price or location,” said Yun.

Properties typically stayed on the market for 43 days in November, up from 41 days in October but down considerably from a year ago (54 days). Short sales were on the market the longest at a median of 110 days in November, while foreclosures sold in 55 days and non-distressed homes took 41 days. A total of 42% of homes sold in November were on the market for less than a month.

NAR President William E. Brown, a Realtor® from Alamo, California, says consumers looking to buy in 2017 should find a Realtor®, seek a preapproval from a lender and start their home search now. “It’s never too early to begin viewing listings online and in person with a Realtor® to identify what’s available within the budget and where,” said Brown. “There are fewer available homes during the winter months but also fewer buyers. With mortgage rates and prices expected to increase as the year goes on, the first few months of 2017 could be an opportune time to close on a home.”

All-cash sales were 21% of transactions in November, down from 22% in October and 27% a year ago. Individual investors, who account for many cash sales, purchased 12% of homes in November, down from 13% in October and 16% a year ago. A total of 58% of investors paid in cash in November, which matches the lowest share since August 2009.

Distressed sales—foreclosures and short sales—rose to 6% in November, up from 5% in October but down from 9% a year ago. Also, 4% of November sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 17% below market value in November (18% in October), while short sales were discounted 16% (unchanged from October).

Single-family and Condo/Co-op Sales

Single-family home sales declined 0.4% to a seasonally adjusted annual rate of 4.95 million in November from 4.97 million in October, but are still 16.2% above the 4.26 million pace a year ago. The median existing single-family home price was $236,500 in November, up 6.8% from November 2015.

Existing condominium and co-op sales jumped 10.0% to a seasonally adjusted annual rate of 660,000 units in November, and are now 10.0% above a year ago. The median existing condo price was $222,600 in November, which is 5.8% above a year ago.

Regional Breakdown

November existing-home sales in the Northeast shot up 8.0% to an annual rate of 810,000, and are now 15.7% above a year ago. The median price in the Northeast was $263,000, which was 3.3% above November 2015’s price level.

In the Midwest, existing-home sales decreased 2.2% to an annual rate of 1.33 million in November, but were18.8% above a year ago. The median price in the Midwest was $180,300, up 6.5% from a year ago.

Existing-home sales in the South in November rose 1.4% to an annual rate of 2.22 million, and are now 11.6% above November 2015. The median price in the South was $206,900, up 9.2% from a year ago.

Existing-home sales in the West declined 1.6% to an annual rate of 1.25 million in November, but were still 19.0% higher than a year ago. The median price in the West was $345,400, up 8.5% from November 2015.