Existing-home sales increase 3.6 percent in December
After a slight fall in November, existing-home sales grew 3.6 percent to a seasonally-adjusted annual rate of 5.54 million in December. Overall sales saw a 10.8 percent jump from last year.
On a full-year basis, total existing-home sales were at the same level as 2018, ending at 5.34 million. A 2.2 percent increase in sales in the South offset a 1.8 percent decline in the West and 1.6 percent decline in the Midwest, while the Northeast was unchanged.
A year in review
NAR’s chief economist, Lawrence Yun, weighs in on the positives and negatives of 2019’s housing sales. “I view 2019 as a neutral year for housing in terms of sales,” he says. “Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”
The median existing-home price for all housing types in December was up 7.8 percent from last year at $274,500, with prices rising in all regions. This price increase marks the 94th straight month of year-over-year gains.
Yun explains the need for price appreciation and wage growth to complement each other. “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” he says. “The hope is for price appreciation to slow in line with wage growth, which is about 3 percent.”
NAR’s Home Affordability Index Ranking and Payroll Job Growth report showed affordability rankings declining in 81 metro areas, with 34 areas seeing non-farm job growth decrease faster in 2019’s third quarter than the national rate over the past five years.
The total housing inventory at the end of December was down 14.6 percent from November, totaling 1.40 million units. With unsold inventory sitting at a 3.0-month supply, totals have dropped for the seventh consecutive month from year-ago levels.
Hopeful for growth in 2020
Yun predicts home sales to pick up in 2020, citing favorable economic conditions. “We saw the year come to a close with economy churning out 2.3 million jobs, mortgage rates below 4 percent and housing starts ramp up to 1.6 million on an annual basis,” he states. “If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020.”
Freddie Mac reports the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.72 percent in December, up from 3.70 percent in November. For context, the average commitment rate across all of 2019 was 3.94 percent.
“NAR is expecting 2020 to be a great year for housing,” says NAR President Vince Malta. “Our leadership team is hard at work to secure policies that will keep our housing market moving in the right direction, like promoting infrastructure reform, strengthening fair housing protections and ensuring mortgage capital remains available to responsible, mortgage-ready Americans.”
Existing-home sales by region
Year-over-year sales are up in all four regions, and compared to last month, December’s sales increased in all but one region.
December existing-home sales:
- Northeast: Up 5.7 percent to an annual rate of 740,000—up 8.8 percent from last year
- Midwest: Down 1.5 percent to an annual rate of 1.30 million—up 9.2 percent from last year
- South: Up 5.4 percent to an annual rate of 2.36 million—up 12.4 percent from last year
- West: Up 4.6 percent to an annual rate of 1.14 million—up 10.7 percent from last year