After two consecutive months of increases, existing-home sales declined in the month of December, in accordance with the National Association of Realtors® (NAR). Not one of the four major U.S. regions saw an increase in sales activity last month.
NAR: U.S. home sales decrease 6.4% in Dec.
Total existing-home sales, completed transactions including single-family homes, town-homes, condominiums and co-ops, decreased 6.4% from November to a seasonally adjusted rate of 4.99 million in December. Sales are currently down 10.3% from last year (5.56 million in December 2017).
Lawrence Yun, NAR’s chief economist, says current housing numbers are partly a result of higher interest rates.
“The housing market is obviously very sensitive to mortgage rates,” Yun says. “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 price for all housing types in December was $253,600, up 2.9% from December 2017 ($246,500). December’s price increase marks the 82nd straight month of year-over-year gains.
Total housing inventory at the end of December decreased to 1.55 million, down from 1.74 million existing homes available for sale in November, but that’s a year-to-year inventor increase from 1.46 million.
Unsold inventory is at a 3.7-month supply at the current sales pace, below 3.9 last month and up from 3.2 months last year.
Homes also stayed on the market for a longer period before securing a contract. They typically stayed on the market for 46 days in December, up from 42 days in November and 40 days just last year. However, 39% of homes sold in December were on the market for less than 30 days.
“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.”
As reported by Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.64% in December from 4.87% in November. The typical commitment rate for all of 2017 was 3.99%.
“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,” says NAR President John Smaby. “Once the government is fully reopened, I am hopeful that housing transactions will increase.”
First-time buyers were accountable for 32% of sales in December, down from November (33%), but the same year-to-year.
All-cash sales made up 22% of transactions in December, up from November and a year ago (21% and 20%, respectively). Individual investors, who account for many cash sales, purchased 13% of homes in December, which happens to be unchanged from November but down year-to-year (16%).
Distressed sales – foreclosures and short sales – represented 2% of sales in December, unchanged from 2% in November and down from 5% a last year.
Single-family and condo/co-op sales
Single-family home sales were at a seasonally adjusted annual rate of 4.45 million in December, down from 4.71 million in November, and 10.1% under the 4.95 million sales pace one year earlier. The median existing single-family home price was $255,200 in December, up 2.9% from December 2017.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 540,000 units in December, down 12.9% from last month and down 11.5% from a year ago. The median existing condo price was $240,600 in December, which is up 2.35 from a year ago.
Regional breakdown
December existing-home sales in the Northeast decreased 6.8% to an annual rate of 690,000 as well as 6.8% below a year ago. The median price in the Northeast was $283,400, which happens to be up 8.2% from December 2017.
In the Midwest, existing-home sales fell 11.2% from last month to an annual rate of 1.19 million in December, down 10.5% 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% to an annual rate of 2.09 million in December, down 8.7% from last year. The median price in the South was $224,300, up 2.5% from a year ago.
Existing-home sales in the West dipped 1.9% to an annual rate of 1.02 million in December, and 15% below this past year. The median price in the West was $374,400, up 0.2% from December 2017.
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