NAR: Existing-Home Sales Dropped 2.5% in Nov.

By Kerry Smith

Overall, U.S. sales dropped a bit, prices rose strongly (up 14.6%), and the inventory of for-sale homes fell to a record-low 2.3 months as the average home sold in 21 days.

WASHINGTON  – Existing-home sales fell in November, snapping a five-month streak of month-over-month gains, according to the National Association of Realtors® (NAR). All major regions either took a step back or held steady in terms of their respective month-over-month status, even as each also showed significant year-over-year growth.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – decreased 2.5% from October to a seasonally-adjusted annual rate of 6.69 million in November. However, sales in total rose 25.8% year-over-year (5.32 million in November 2019).

“Home sales in November took a marginal step back, but sales for all of 2020 are already on pace to surpass last year’s levels,” says Lawrence Yun, NAR’s chief economist. “Given the COVID-19 pandemic, it’s amazing that the housing sector is outperforming expectations.”

Yun says job recoveries stalled in the past few months, and fast-rising coronavirus cases along with stricter lockdowns have weakened consumer confidence.

“Circumstances are far from being back to the pre-pandemic normal,” he says. “However, with the latest stimulus package and the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021.”

The median existing-home price for all housing types in November was $310,800, up 14.6% from November 2019 ($271,300), with price increases in every region. November’s national price increase marks 105 straight months of year-over-year gains.

Total housing inventory at the end of November was 1.28 million units – down 9.9% from October and down 22% from one year ago. Unsold inventory now sits at an all-time – a 2.3-month supply at the current sales pace, down from 2.5 months in October and 3.7-months in November 2019.

Properties typically remained on the market for 21 days in November, seasonally even with October and down from 38 days in November 2019. Three out of four listings (73%) sold in November were on the market for less than a month.

“The positive momentum that home sellers are seeing will carry on well into the new year,” Yun predicts, citing low mortgage rates and remote-work flexibilities.

“Housing affordability, which had greatly benefitted from falling mortgage rates, is now being challenged due to record-high home prices,” Yun says. “That could place strain on some potential consumers, particularly first-time buyers.”

First-time buyers were responsible for 32% of sales in November, equal to the percentage seen in both October 2020 and November 2019.

Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in November, identical to the share recorded in October 2020 and a small decline from 16% in October 2019. All-cash sales accounted for 20% of transactions in November, up from 19% in October but unchanged from November 2019.

Distressed sales – foreclosures and short sales – represented less than 1% of sales in November, equal to October’s percentage but down from 2% in November 2019.

“While we still face economic and health challenges ahead, I have zero doubt that the nation will continue to recover from this pandemic,” says NAR President Charlie Oppler. “Whether it’s through volunteering or philanthropy, or helping a given buyer secure that dream home, Realtors have stepped up in a major way, and we will continue with those efforts in 2021 and beyond.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.77% in November, down from 2.83% in October. The average commitment rate across all of 2019 was 3.94%.

Single-family and condo/co-op sales: Single-family home sales sat at a seasonally-adjusted annual rate of 5.98 million in November, down 2.4% from 6.13 million in October, and up 25.6% from one year ago. The median existing single-family home price was $315,500 in November, up 15.1% from November 2019.

Existing condominium and co-op sales recorded a seasonally-adjusted annual rate of 710,000 units in November, down 2.7% from October and up 26.8% from one year ago. The median existing condo price was $271,400 in November, an increase of 9.5% from a year ago.

Regional breakdown: Median home prices increased at double-digit rates in each of the four major regions from one year ago.

November 2020 saw existing-home sales in the Northeast drop 2.2%, recording an annual rate of 880,000, a 25.7% increase from a year ago. The median price in the Northeast was $354,100, up 17.4% year-to-year.

Existing-home sales fell 2.5% in the Midwest to an annual rate of 1,590,000 in November, but up 24.2% from a year ago. The median price in the Midwest was $239,100, a 14.6% increase from November 2019.

Existing-home sales in the South decreased 3.8% to an annual rate of 2.82 million in November – but they’re up 25.9% from the same time one year ago. The median price in the South was $270,000, a 15.0% increase year-to-year.

Existing-home sales in the West were unchanged from last month, recording an annual rate of 1,400,000 in November, a 27.3% increase from a year ago. The median price in the West was $467,600, up 13.8% from November 2019.

© 2020 Florida Realtors® Reprinted with Permission

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