A November Existing – Home Sales Slide
According to the National Association of Realtors, all major regions in the nation experienced a decline in existing-home sales in November right after reaching the highest of the year. Sales 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. While sales flattened, housing supply showed some deflation. But even so, unsold inventory remains 2.0 percent higher than a year ago, when there were 2.05 million existing homes available for sale. Lawrence Yun, NAR chief economist says:
Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year’s promising job growth. Much faster price and rent appreciation – easily exceeding wage growth – will occur next year unless new construction picks up measurably.
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. Yun explains why sales were nationally bumpy in November as the housing inventory began its seasonal decent:
Fewer people bought homes last month despite interest rates being at their lowest levels of the year. The stock market swings in October may have impacted some consumers’ psyche and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.
Most likely due to low downpayment programs like Fannie Mae and Freddie Mac’s, 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. NAR President Chris Polychro says that these programs should improve access to credit for responsible buyers:
The new program mitigates risk with strong underwriting and ensures that responsible buyers have access to safe and affordable mortgage credit. Furthermore, NAR believes lenders must do their part to ensure loans are prudently underwritten and are made available to qualified borrowers.
Consistent with the rise of first-time home buyers, Fannie Mae’s November 2014 National Housing Survey shows that the share of respondents who think it would be difficult to get a home mortgage today decreased by 3 percentage points. The survey shows key inputs that offer a window into the future course of housing trends across the country. Survey highlights show that consumer attitude improves as the economy lifts:
- The share of respondents who say the economy is on the right track fell 4 percentage points to 36 percent.
- The percentage of respondents who expect their personal financial situation to get better over the next 12 months increased to 46 percent.
- The share of respondents who say their household income is significantly higher than it was 12 months ago remained at 25 percent.
- The share of respondents who say their household expenses are significantly higher than they were 12 months remained at 36 percent.