U.S. Existing-Home Sales Decline for First Time in Six Months
(Bloomberg) -- Sales of previously owned U.S. homes fell in November for the first time in six months, suggesting that surging prices and a record-low supply are constraining red-hot demand.
Contract closings decreased 2.5% from the prior month’s almost 15-year high to an annualized 6.69 million rate, according to National Association of Realtors data released Tuesday. That was up 25.8% from a year earlier and compared with economists’ forecasts for 6.7 million.
The median selling price jumped 14.6% from a year earlier on an unadjusted basis to $310,800, the fourth straight month of double-digit increases.
The decline signals that strong demand is running up against constraints, with few available properties and weaker affordability likely keeping some buyers out of the market. Still, home sales remain brisk, well above pre-pandemic levels and near the highest since 2005, with demand skewed toward more-expensive houses.
The new fiscal stimulus package, approved by Congress on Monday, could prop up household incomes and keep the purchasing spree going into the first quarter of next year.
“Housing affordability, which had greatly benefitted from falling mortgage rates, are now being challenged due to record-high home prices,” Lawrence Yun, NAR’s chief economist, said in a statement. “That could place strain on some potential consumers, particularly first-time buyers.”
Several data points illustrated how historically tight the market is.
Available inventory declined 22% from a year earlier to 1.28 million units, the lowest in data back to 1982, the NAR said. Properties remained on the market for 21 days in November, unchanged from the prior month and matching a record low. It would take 2.3 months to sell all the homes on the market at the current pace, the lowest on record.
The NAR’s report showed purchases of existing homes fell in three of four regions; they were unchanged in the West.
Existing home sales account for about 90% of U.S. housing and are calculated when a contract closes. A separate report last week showed strength in new home construction, which increased to a nine-month high.
©2020 Bloomberg L.P.