Existing home sales in November failed to outdo those in the same month a year earlier for the first time in 29 months. The National Association of Realtors® (NAR) said today that existing single-family homes, condominiums, townhomes, and cooperative apartments sold at a seasonally adjusted annual rate of 4.90 million units during the month, a 4.2 percent drop from October's rate of 5.12 million and 1.2 percent below the November 2012 sales pace of 4.96 million.
Completed sales of single-family homes were down 3.8 percent to a seasonally adjusted annual rate of 4.32 million in November from 4.49 million in October, and were 0.9 percent below the 4.36 million-unit level in November 2012. Existing condominium and co-op sales dropped 7.9 percent to an annual rate of 580,000 units in November from 630,000 units in October, and were 3.3 percent lower than the 600,000-unit pace a year ago.
Despite declining sales, prices continued to rise, at least when viewed year-over-year. The national median price for all categories of housing was $196,300 in November, 9.4 percent higher than a year earlier. The median single-family home price was $196,200 and the median condo price was $197,400, reflecting annual increases of 9.4 percent and 10.0 percent respectively.
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Lawrence Yun, NAR chief economist, said the market is being squeezed. "Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit," he said. "There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years."
To Yun's point about housing supply, total inventory declined 0.9 percent in November to 2.09 million existing homes available for sale. Due to the declining sales rate this represented a 5.1-month supply at the current sales pace, compared with 4.9 months in October. In November 2012 there was a 4.8-month supply.
Short sales accounted for 5 percent of the homes sold in November and foreclosure sales for 9 percent. Short sales sold at an average discount of 13 percent and foreclosures 17 percent. The aggregate 14 percent distressed home share of sales was the same as in October but down from 22 percent in November 2012, partially accounting for the increasing prices.
First-time buyers accounted for 28 percent of purchases in November, unchanged from October and down 2 percentage points from the previous November. Investors accounted for 19 percent of purchases and seven out of ten of them paid cash for their purchases, thus accounting for many of the 32 percent of sales that were all cash.
The median time on market for all homes was 56 days in November, up from 54 days in October, but well below the 70 days of marketing time required a year earlier. Short sales were on the market for a median of 120 days, while foreclosures typically sold in 59 days, and non-distressed homes took 55 days. Thirty-five percent of homes sold in November were on the market for less than a month.
NAR President Steve Brown noted that new rules defining the Qualified Mortgage will be going into effect soon. "New underwriting rules to protect borrowers, effective in January, will prohibit many loan features, set tighter limits on the amount of debt a borrower can have and still get a mortgage, and require that lenders accurately measure a borrower's ability to repay.
"This means that qualified borrowers are getting a loan that they are very likely to be able to repay, but some borrowers may wind up paying much more for their mortgage, or not get a loan at all due to the tougher standards," he said. "The new rules may tighten credit too much, but we're hopeful regulators will make adjustments if this proves to be true."
Regionally, existing-home sales in the Northeast declined 3.0 percent to an annual rate of 650,000 in November, but are 6.6 percent above November 2012. The median price in the Northeast was $242,900, up 5.7 percent from a year ago.
Existing-home sales in the Midwest fell 4.1 percent in November to a 1.17 million annual pace, but are unchanged from a year ago. The median price in the Midwest was $151,100, 6.7 percent higher than in November 2012.
In the South, existing-home sales declined 2.4 percent to an annual level of 2.01 million in November, but are 1.0 percent above November 2012. The median price in the South was $168,700, a 7.7 percent annual increase.
Sales in the West dropped 8.5 percent to a pace of 1.07 million in November, and are 10.1 percent below a year ago, in part from constrained inventory conditions. The median price in the West was $284,400, up 16.5 percent from November 2012.
