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Existing-home sales fall for first time in 5 months
Existing-home sales declined 2.5 percent in November to a seasonally-adjusted rate of 6.69 million units, representing a 25.8 percent increase in sales versus a year ago. In a new Macro Data Flash report, NAFCU's Nadir Tekarli notes that although existing-home sales have dipped for the first time in five months, they're still near the highest level since 2006.
"Historically low mortgage rates continue to fall and fuel homebuying, though housing inventory falling to a 20-year low is hindering further sales growth," wrote Tekarli, NAFCU’s research assistant.
Based on current sales, there was 2.3 months of supply at the end of November, down 0.2 from October. Analysts consider six months of supply to be roughly balanced between supply and demand.
"With the Fed keeping rates low through at least 2022, low mortgage rates will be a tailwind into the medium-term. Luckily, construction is picking up the pace with new housing starts rising to 1.19 million annualized units in November, the highest level since 2007," Tekarli added. "Tight inventory and high prices in the existing homes market may convince a growing subsection of buyers to purchase new homes instead.
"The recently passed COVID relief bill will support the income of families and bolster demand, but it will be years before the labor market fully recovers. NAFCU expects existing home sales to remain strong in the months to come as COVID vaccine deployment paves the path back to normalcy," concluded Tekarli.
Sales declined in all regions during the month; however, versus a year ago, sales were up in all regions. The West was up 27.3 percent versus November 2019, followed by the South (+25.9 percent), the Northeast (+25.7 percent), and the Midwest (+24.2 percent).
The median existing-home price declined from $313,100 in October to $310,800 in November (not seasonally-adjusted), representing a 14.6 percent increase from the median price a year ago.