National Association of Realtors: Existing-Home Sales See 6.4 Percent Drop in December

After two consecutive months of increases, existing-home sales declined in the month of December, according to the National Association of Realtors®. None of the four major U.S. regions saw a gain in sales activity last month.

Total existing-home sales¹, https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 6.4 percent from November to a seasonally adjusted rate of 4.99 million in December. Sales are now down 10.3 percent from a year ago (5.56 million in December 2017).

Lawrence Yun, NAR’s chief economist, says current housing numbers are partly a result of higher interest rates during much of 2018. “The housing market is obviously very sensitive to mortgage rates. Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today. Now, with mortgage rates lower, some revival in home sales is expected going into spring.”

The median existing-home price² for all housing types in December was $253,600, up 2.9 percent from December 2017 ($246,500). December’s price increase marks the 82^nd straight month of year-over-year gains.

Total housing inventory³ at the end of December decreased to 1.55 million, down from 1.74 million existing homes available for sale in November, but represents an increase from 1.46 million a year ago. Unsold inventory is at a 3.7-month supply at the current sales pace, down from 3.9 last month and up from 3.2 months a year ago.

Properties typically stayed on the market for 46 days in December, up from 42 days in November and 40 days a year ago. Thirty-nine percent of homes sold in December were on the market for less than a month.

“Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home price appreciation,” says Yun. “But there is still a lack of adequate inventory on the lower-priced points and too many in upper-priced points.”

Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in December were Chico, California; Midland, Texas; Odessa, Texas; Columbus, Ohio; and Fort Wayne, Ind.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 4.64 percent in December from 4.87 percent in November. The average commitment rate for all of 2017 was 3.99 percent.

“The partial shutdown of the federal government has not had a significant effect on December closings, but the uncertainty of a shutdown has the potential to harm the market,” said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota and broker at Edina Realty. “Once the government is fully reopened, I am hopeful that housing transactions will increase.”

First-time buyers were responsible for 32 percent of sales in December, down from last month (33 percent), but the same as a year ago. NAR’s 2018 Profile of Home Buyers and Sellers – released in late 2018⁴ – revealed that the annual share of first-time buyers was 33 percent.

All-cash sales accounted for 22 percent of transactions in December, up from November and a year ago (21 and 20 percent, respectively). Individual investors, who account for many cash sales, purchased 13 percent of homes in December, the same as November but down from a year ago (16 percent).

Distressed sales⁵ – foreclosures and short sales – represented 2 percent of sales in December, unchanged from 2 percent last month and down from 5 percent a year ago.

Single-family and Condo/Co-op Sales

Single-family home sales sit at a seasonally adjusted annual rate of 4.45 million in December, down from 4.71 million in November, and 10.1 percent below the 4.95 million sales pace from a year ago. The median existing single-family home price was $255,200 in December, up 2.9 percent from December 2017.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 540,000 units in December, down 12.9 percent from last month and down 11.5 percent from a year ago. The median existing condo price was $240,600 in December, which is up 2.3 percent from a year ago.

Regional Breakdown

December existing-home sales in the Northeast decreased 6.8 percent to an annual rate of 690,000, 6.8 percent below a year ago. The median price in the Northeast was $283,400, which is up 8.2 percent from December 2017.

In the Midwest, existing-home sales fell 11.2 percent from last month to an annual rate of 1.19 million in December, down 10.5 percent overall from a year ago. The median price in the Midwest was $191,300, unchanged from last year.

Existing-home sales in the South dropped 5.4 percent to an annual rate of 2.09 million in December, down 8.7 percent from last year. The median price in the South was $224,300, up 2.5 percent from a year ago.

Existing-home sales in the West dipped 1.9 percent to an annual rate of 1.02 million in December, 15 percent below a year ago. The median price in the West was $374,400, up 0.2 percent from December 2017.

About National Association of Realtors

The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Notes

¹Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

²The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

³Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

⁴Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors®Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

⁵Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at nar.realtor.

Source: National Association of Realtors