Courtesy of Mish
Existing home sales plunged 2.8% in December to 5.49 million units, seasonally adjusted annualized (SAAR). The Bloomberg Econoday consensus estimate was -1.1%.
Year-over-year sales were up a mere 0.7%. Nonetheless, Lawrence Yun, NAR chief economist, crowed this was the housing market’s best year since the great recession.
Highlights
Lack of homes on the market is increasingly the salient feature of the housing sector, one that is holding down sales. Existing home sales fell 2.8 percent in December to a lower-than-expected 5.490 million annualized rate. An offset is a sizable upward revision to November which now stands at 5.650 million.
Supply is the lowest it’s been since at least 1999 according to the National Association of Realtors which compiles the existing home sales report. The number of houses on the market fell 11 percent in the month to 1.650 million. At the current sales rate, supply fell from 3.9 months to only 3.6 months. These readings are very low.
Yet the lack of supply isn’t making for new price increases as the median, at $232,000, is down 0.9 percent on the month for a year-on-year rate of only plus 4.0 percent. This is down from 6.5 percent in November and is now back to multi-year lows.
Existing Home Inventory Hits Record Low
Mortgage News Daily reports Existing Home Inventory Hits Record Low.
Existing home sales finished out 2016 with a generally expected decline. Still, the National Association of Realtors® (NAR) said today that 2016 overall was the best year for existing home sales in a decade.
NAR estimated that sales for the year as a whole were 5.45 million units. This surpasses the 2015 total of 5.25 million and is the highest total since 2006 when sales reached 6.48 million.
Lawrence Yun, NAR chief economist, says the housing market’s best year since the Great Recession ended on a healthy but somewhat softer note. “Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” he said. “However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.”
The inventory of existing homes shrunk to the lowest level in NAR’s records which date back to 1999. There were 1.65 million existing homes available for sale at the end of December, down 10.8 percent from November and 6.3 percent from the previous December. Inventories have fallen year-over-year for 19 consecutive months. NAR estimates that the current inventory represents a 3.6-month supply at the current rate of sales, down from 3.9 percent in December 2015.
The median price for all types of existing homes sold during the last month of the year was $232,200, a 4.0 percent gain from the December 2015 median of $223,200 and the 58th consecutive month of year-over-year price increases. Single-family homes sold at a median price of $233,500, up 3.8 percent while condo prices rose 5.5 percent on an annual basis, to $221,600.
Supply Issue or Pricing Issue?
In contrast to statements made by the NAR and Econoday, this is not simply a supply issue.
More supply at prices people can afford will not do a damn thing!
Median prices have risen 58 months. Prices have outstripped wage growth. Yet, despite a rise in prices and despite the plunge in sales, inventories in December represents represents a record low 3.6-month supply at the current sales rate, down from 3.9 months in November.
That’s another clue regarding price. Buyers are not getting the price they want (or need), despite the rise in prices.
