Existing-home sales continued to improve in November with low inventory supply pressuring home prices, 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 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October, and are 14.5 percent higher than the 4.40 million-unit pace in November 2011. Sales are at the highest level since November 2009 when the annual pace spiked at 5.44 million.
Lawrence Yun, NAR chief economist, says there is healthy market demand. “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation,” he notes. “With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes. Areas impacted by Hurricane Sandy show storm-related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas.”
The national median existing-home price for all housing types was $180,600 in November, up 10.1 percent from November 2011. This is the ninth consecutive monthly year-over-year price gain, which last occurred from September 2005 to May 2006.
Distressed homes– foreclosures and short sales sold at deep discounts – accounted for 22 percent of November sales (12 percent were foreclosures and 10 percent were short sales), down from 24 percent in October and 29 percent in November 2011. Foreclosures sold for an average discount of 20 percent below market value in November, while short sales were discounted 16 percent.
“The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages,” Yun says.
Total housing inventory at the end of November fell 3.8 percent to 2.03 million existing homes available for sale, which represents a 4.8-month supply4 at the current sales pace; it was 5.3 months in October, and is the lowest housing supply since September of 2005 when it was 4.6 months.
Listed inventory is 22.5 percent below a year ago when there was a 7.1-month supply. Raw unsold inventory is now at the lowest level since December 2001 when there were 1.89 million homes on the market.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.35 percent in November from 3.38 percent in October; the rate was 3.99 percent in November 2011.
NAR President Gary Thomas says there’s been speculation of a rise in short sales before the end of the year with pending expiration of the Mortgage Forgiveness Debt Relief Act. “However, there’s been no movement in short sales, their market share is staying in a narrow range, and they’re still taking much longer to sell – typically three months,” he says.
“The fact remains it is extremely difficult to expedite a short sale, and banks’ response to client urgency is only starting to improve. However, we’re hopeful that the act will be extended before it expires on December 31 so sellers don’t have to pay taxes on forgiven mortgage debt, which would be unfairly treated as income for owners who are selling under duress,” Thomas notes.
The median time on market for all homes was 70 days in November, slightly below 71 days in October, but is 28.6 percent below 98 days in November 2011. Thirty-two percent of homes sold in November were on the market for less than a month, while 20 percent were on the market for six months or longer; these findings are unchanged from October.
First-time buyers accounted for 30 percent of purchases in November, down from 31 percent in October and 35 percent in November 2011.
All-cash sales were at 30 percent of transactions in November, up slightly from 29 percent in October and 28 percent in November 2011. Investors, who account for most cash sales, purchased 19 percent of homes in November, little changed from 20 percent in October; they were 19 percent in November 2011.
Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.44 million in November from 4.21 million in October, and are 12.4 percent higher than the 3.95 million-unit level in November 2011. The median existing single-family home price was $180,600 in November, up 10.1 percent from a year ago.
Existing condominium and co-op sales jumped 9.1 percent to an annualized level of 600,000 in November from 550,000 in October, and are 33.3 percent above the 450,000-unit pace a year ago. The median existing condo price was $181,000 in November, which is 10.6 percent higher than November 2011.
Regionally, existing-home sales in the Northeast rose 6.9 percent to an annual rate of 620,000 in November and are 14.8 percent above November 2011. The median price in the Northeast was $232,900, down 2.0 percent from a year ago.
Existing-home sales in the Midwest increased 7.2 percent in November to a pace of 1.19 million and are 21.4 percent higher than a year ago. The median price in the Midwest was $141,600, which is 7.0 percent above November 2011.
In the South, existing-home sales rose 7.9 percent to an annual level of 2.04 million in November and are 17.2 percent above November 2011. The median price in the South was $157,400, up 10.5 percent from a year ago.
Existing-home sales in the West rose 0.8 percent a pace of 1.19 million in November and are 4.4 percent higher than a year ago. With ongoing inventory constraints, the median price in the West was $248,300, which is 23.9 percent above November 2011.