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Existing home sales enjoyed a surge in November, and new home sales also saw better-than-expected gains for the month. Meanwhile, incomes skirted down and spending notched up by equally slight amounts.
Existing Home Sales
Gains in the Northeast and the South helped existing home sales see their third straight monthly gain, according to last week’s report from the National Association of Realtors. Transactions of single-family homes, townhomes, condominiums and co-ops grew 0.7 percent for the month to hit an annual rate of 5.61 million. This was 15.4 percent higher than November 2015’s rate, and was the best sales pace since February 2007’s rate of 5.79 million.
“The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months,” said NAR Chief Economist Lawrence Yun. “Furthermore, it’s no coincidence that home shoppers in the Northeast — where price growth has been tame all year — had the most success last month.”
November’s median price for existing homes of all types grew to $234,900, which was 6.8 percent higher than November 2015’s $220,000 price tag. This was the 57th consecutive monthly year-over-year price gain.
The supply of existing homes for sale at the end of November dropped 8 percent to 1.85 million units, representing a 4-month inventory at November’s sales rate. November’s supply was 9.3 percent down from November 2015’s 2.04 million homes.
New Home Sales
Turning to new real estate, sales of new single-family homes grew 5.2 percent in November to hit an annual rate of 592,000, the Census Bureau and the Department of Housing and Urban Development reported last week. This was well above market expectations of a 573,000 annual rate and was 16.5 percent over November 2015’s pace of 508,000.
Looking at price, November’s median new home price came in at $305,400 and the average sales price was $359,900. In terms of inventory, the estimated supply of new homes for sale at the end of November totaled 250,000, representing a 5.1-months’ supply at November’s sales rate.
“Builders seem prepared to be a little more aggressive to meet the excess of demand over supply, though,” Amherst Pierpont Securities Chief Economist Stephen Stanley wrote in a statement. “ … Higher mortgage rates could produce renewed caution heading into next year.”
Personal Incomes and Spending
While inventory helps temper home prices, incomes are the other half of the housing affordability equation. In that regard, personal incomes grew $1.6 billion, which was less than 0.1 percent, according to last week’s report from the Bureau of Economic Analysis. This was well below the 0.3 percent increase the market had expected. Disposable personal income (DPI; income after taxes) dropped $1.3 billion (again, less than 0.1 percent) from October.
While incomes were slightly down, spending was slightly up. Personal consumption expenditures (PCE) grew $24.0 billion, which was roughly 0.2 percent higher than October’s spending, according to the Bureau. Excluding food and energy, personal spending grew less than 0.1 percent.
Don Fleming has been practicing real estate for more than 10 years , with the primary goal to become a trusted advisor for his clients. He specializes in new construction, where he leverages his exten....
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