Sales of Existing Homes Drop on Tighter Inventories, Despite Low Interest Rates

Sales of Existing Homes Drop on Tighter Inventories, Despite Low Interest RatesInterest rates near their lows for the year did not do much to slow a drop in sales of existing homes in November, especially in areas that saw some tightening of inventories, according National Association of Realtors
All major regions of the nation saw declining in sales compared to a month earlier.
The median existing-home price for all housing types in the U.S. in November was $205,300, which is 5.0 percent above November 2013. This marks the 33rd consecutive month of year-over-year price gains.
Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — fell 6.1 percent to a seasonally adjusted annual rate of 4.93 million in November,  from a downwardly-revised 5.25 million in October.
Sales dropped to their lowest annual pace since May (4.91 million), but are above year-over-year levels (up 2.1 percent from last November) for the second straight month.

“Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” said Lawrence Yun, NAR chief economist. “The stock market swings in October may have impacted some consumers’ psyches and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”
Total housing inventory at the end of November fell 6.7 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace – unchanged from last month.
Despite the tightening in supply, unsold inventory remains 2.0 percent higher than a year ago, when there were 2.05 million existing homes available for sale.
“Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year’s promising job growth,” says Yun. “Much faster price and rent appreciation – easily exceeding wage growth – will occur next year unless new construction picks up measurably.”
All-cash sales were 25 percent of transactions in November, down from 27 percent in October and 32 percent in November of last year.
Individual investors, who account for many cash sales, purchased 15 percent of homes in November, unchanged from last month and below November 2013 (19 percent). Sixty-one percent of investors paid cash in November.

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