For the third consecutive month, existing-home sales were on the rise, with all major regions of the country except the West posting a “significant hike in sales activity” last month, the National Association of REALTORS® reported Wednesday.
Total existing-home sales—which includes completed transactions for single-family homes, townhomes, condos, and co-ops—increased 5.6 percent in November to a seasonally adjusted annual rate of 5.81 million. Sales are now 3.8 percent higher than a year ago and are at the strongest pace since December 2006.
“Faster economic growth in recent quarters, the booming stock market, and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” says Lawrence Yun, NAR’s chief economist. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”
Here’s a closer look at November’s numbers:
Home prices: The median existing-home price for all housing types in November was $248,000, increasing 5.8 percent from a year ago.
Supply: Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale. Inventories are now 9.7 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace. “The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” Yun says. “Price appreciation is too fast in a lot of markets right now. The increase in home builder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”
Cash purchases: All-cash sales comprised 22 percent of transactions in November, up from 21 percent a year ago. That makes up the highest share of all-cash sales since May. Individual investors are the biggest source of cash sales. They purchased 14 percent of homes in November, unchanged from a year ago. “The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” Yun says. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.”
First-time home buyers: This group accounted for 29 percent of sales in November, down from 32 percent a year ago.
Days on market: Properties remained on the market for an average of 40 days in November, down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.
Distressed properties: Foreclosures and short sales made up 4 percent of sales, down from 6 percent a year ago. Broken out, 3 percent of sales in November were foreclosures while 1 percent were short sales.