Both new and existing single-family home sales went up in November. The National Association of Home Builders (NAHB) said this week that sales of new homes increased 17.5% to a seasonally adjusted annual rate of 733,000 units and the existing home sales rose just .2% according to newly released data from the National Association of Realtors® (NAR)
New homes sales hit a post-recession with the highest pace since July 2007. So far this year, new homes sales are now 9.1% above their level over the same period last year.
The entire nation saw increases in new home sales with a 31.1% in the West, 14.9% in the South, 9.5% in the Northeast and 6.9% in the Midwest. There are approximately 282,000 units of new home inventory, which is a 4.6-month supply at the current sales pace, according to the NAHB.
The chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas, Granger MacDonald had said;“The November sales numbers are consistent with our reports of growing builder confidence, particularly big gains in traffic to new home sites. Builders are encouraged by the increased demand for housing and expect business to continue to improve in 2018.”
Robert Dietz, the NAHB Chief Economist stated; “Tax reform legislation should boost economic growth, setting the stage for continued strengthening of the housing market. Job market growth, expected wage increases and tight existing home inventory will also help the market move forward next year.”
EXISTING SINGLE-FAMILY HOME SALES
The NAR said this week that existing home sales were up 0.2% to 109.5 in November from 109.3 in October. With last month’s modest increase, the index remains at its highest reading since June (110.0), and is now 0.8% above a year ago.
The Northeast saw the biggest increase with a 4.1% jump to 98.9 in November and is now 1.1% above a year ago. In the Midwest, the index rose 0.4% to 105.8 in November and is now 0.8% higher than November 2016.
The South and West saw declines in November existing home sales, The South was down 0.4% to an index of 123.1 in November but are still 2.5% higher than last November. The index in the West declined 1.8% in November to 100.4 and is now 2.3% below a year ago.
Lawrence Yun, NAR chief economist, says contract signings mustered a small gain in November and were up annually for the first time since June. “The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” he said. “However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors® say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home.”
One of the biggest questions heading into 2018, according to Yun, is if the depressed levels of available supply can improve enough to slow price growth and make buying a home more affordable. While last month’s significant boost in existing sales was noteworthy, it did come with some concerns. Sales prices were up 5.8 percent – more than double wage growth – and the 3.4-month supply of homes on the market was the lowest since NAR began tracking in 1999.
“The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid homebuying demand next year, while also putting additional pressure on inventory levels and affordability,” said Yun. “Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home.”
Yun forecasts for existing-home sales to finish 2017 at around 5.54 million, which is an increase of 1.7 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2018, Yun anticipates essentially no change (a decline of 0.4 percent) in existing sales (5.52 million), and price growth to moderate to around 2 percent.