Just as the housing industry was preparing to celebrate the first year in a decade when sales progressed at a relatively moderate pace and experts from coast to coast were heralding a return to normalcy, November existing home sales laid the biggest egg in four years.
Total existing-home sales, which are 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, according to the National Association of Realtors.
If November’s anemic showing is repeated in December, the real estate industry will see sales end the year below the symbolic 5 million mark, a serious sign that the recovering is faltering. Last year sales reached a total 5.09 million units, which was 9.1 percent higher than 2012. It was the strongest performance since 2006 when sales reached an unsustainably high 6.48 million sales were the highest since 2006, and median prices maintained strong growth, after rising 1 percent over November.
NAR characterized November’s performance as “losing momentum” and NAR Chief Economist Lawrence said sales activity was “choppy” throughout the country. “Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” he said. “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.”
The median existing-home price for all housing types 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 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.
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.
The percent share of first-time buyers in November climbed to 31 percent, up from October (29 percent) and is the highest share since October 2012 (also 31 percent). First-time buyers have represented an average of 29 percent of buyers through November of this year.