Sales of previously owned homes rose in November to an almost 11-year high, indicating demand picked up momentum heading into the end of the year, according to a National Association of Realtors report released Wednesday.
Contract closings rose 5.6% month-to-month to a 5.81 million annual rate (the estimate was 5.53 million). The median sales price increased 5.8% year-to-year to $248,000. Inventory of available properties fell 9.7% year-to-year to 1.67 million, the second-lowest in records to 1999, the NAR said.
The results show broad strength, with particular firmness in the upper-end market where inventory conditions are “markedly better,” the group said. Forty-four percent of homes sold in November were on the market for less than a month.
A sustained housing recovery is helping boost economic growth this quarter. At the same time, it’s still hard for many first-time and younger buyers to enter the market given the shortage of available houses for sale and property price appreciation that’s outpacing wage growth.
Higher mortgage rates next year could further cut into affordability, the NAR said. Even so, the housing recovery remains on track as demand is being underpinned by a steady job market and appreciating stock portfolios for some Americans.
“Home prices continue to march higher at a very solid pace,” Lawrence Yun, NAR’s chief economist, said at a press briefing accompanying the report. The data are “showing exceptionally tight inventory conditions.”
The overall impact from the tax reform plan “could be mildly negative,” however that could be cushioned by good market conditions that include short-term fiscal stimulus from the legislation, he said. The net impact could be slower price gains of up to 3% in 2018, he said.
Purchases climbed in three of four regions, led by an 8.4% gain in the Midwest and an 8.3% advance in the South; sales fell 2.3% in the West.
At the current pace, it would take 3.4 months to sell the homes on the market, the lowest in records to 1999 and down from 3.9 months in the prior month. The Realtors group considers less than a 5-month supply consistent with a tight market.
Single-family home sales climbed 4.5% to annual rate of 5.09 million. Purchases of condominium and co-op units rose to a 720,000 pace.