Existing-home sales remain high despite November’s slight dip
Breaking a five-month streak of month-over-month gains, existing-home sales decreased 2.5% to a seasonally adjusted annual rate of 6.69 million in November, though sales are still 25.8% higher than last year. “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 National Association of Realtors® (NAR’s) chief economist Lawrence Yun. “Given the COVID-19 pandemic, it’s amazing that the housing sector is outperforming expectations.”
Yun explains the combination of stalled job recoveries, increasing coronavirus cases and the implementation of further lockdowns has weakened consumer confidence. “Circumstances are far from being back to the pre-pandemic normal,” he states. “However, the latest stimulus package and with the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021.”
Home prices up, inventory down
The median existing-home price in November was up 14.6% from last year, with prices increasing in every region, marking the 105th straight month of year-over-year gains. Meanwhile, total housing inventory was down 9.9% from last month and 22% from last year, totaling 1.28 million units at the end of November. Unsold inventory is at an all-time low 2.3-month supply, which is down from 2.5 months in October and 3.7 months in November 2019.
On average, properties remained on the market for 21 days in November, down from last year’s 38 days, with 73% of homes sold on the market for less than a month.
“The positive momentum that home sellers are seeing will carry on well into the new year,” says Yun, pointing to low mortgage rates and the flexibility remote work continues to bring.
Industry experts drew predictions at NAR’s recent Real Estate Forecast Summit—anticipating mortgage rates to remain around 3% and annual median home prices to increase by 8%.
“Housing affordability, which had greatly benefitted from falling mortgage rates, are now being challenged due to record-high home prices,” says Yun. “That could place strain on some potential consumers, particularly first-time buyers.”
NAR President Charlie Oppler foresees further recovery for the coming year. “While we still face economic and health challenges ahead, I have zero doubt that the nation will continue to recover from this pandemic,” he says.
Across the regions
While all four major regions saw a slight decline or remained steady from a month-over-month standpoint, each experienced double-digit year-over-year growth.
November existing-home sales:
- Northeast: down 2.2% to an annual rate of 880,000—25.7% higher than last year
- Midwest: down 2.5% to an annual rate of 1,590,000—24.2% higher than last year
- South: down 3.8% to an annual rate of 2,820,000—25.9% higher than last year
- West: unchanged at an annual rate of 1,400,000—27.3% higher than last year
All four major regions also saw significant home price increases.
November median home prices:
- Northeast: $354,100—up 17.4% from last year
- Midwest: $239,100—up 14.6% from last year
- South: $270,000—up 15% from last year
- West: $467,600—up 13.8% from last year