Home sales rise in November despite tight supplies

The Scotsman Guide - Victor Whitman - 21 December 2016

U.S. home sales rose for the third consecutive month in November on a surge of buying in the Northeast, the National Association of Realtors (NAR) reported.

Existing home sales ran at an annual pace of 5.61 million, the highest level since February 2007. Sales were up 0.7 percent from the October level and 15 percent higher than a year earlier, the trade group said. October’s reading was downwardly revised to 5.57 million.

Home sales picked up strongly in the past three months ahead of the recent sharp increase in mortgage rates, NAR’s Chief Economist Lawrence Yun said.

"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," Yun 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."

For the month, sales rose by 8 percent in the Northeast over the October level and by 1.4 percent in the South, but fell by 2.2 percent in the Midwest and by 1.6 percent in the West. On a year-over-year, home sales are running ahead of the pace of last year by double digits in all four regions.  

Despite the strong sales, tight inventories of homes for sale are causing problems for the market, NAR said. Home prices rose year over year for the 57th consecutive month. The median home price reached $234,900, up 6.8 percent from November 2015.

The shortage of homes for sale is also worsening. NAR estimated that 1.85 million homes were for sale at the end of November, down 8 percent in the month and 9.3 percent lower than a year ago. The unsold inventory represented a four months supply of homes, down from 4.3 months in October.  Inventories have fallen year over year for 18 consecutive months, NAR said.

"Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017," Yun said. "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."