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Existing-home sales might have climbed in October, but the momentum failed to continue into November. According to the National Association of Realtors (NAR), month-over-month sales declined in November—the drop was largely confined to the South and West, as the Northeast and Midwest reported growth. Yet year-over-year sales for the country were up 2.7%.
A Healthy Economy
There was evidence of more positive market signs in November. Median home prices in every sales region climbed higher from a year ago, with the West showing the largest increase in prices. In addition, at a year-end real estate forecast summit, the NAR predicted that the country will avoid a recession in 2020, and 14 leading housing and financial industry economists forecasted that the economy would grow by 2% throughout the year. Considering all these factors, Lawrence Yun, chief economist for the NAR, was not concerned by November's decline in home sales. "Sales will be choppy when inventory levels are low," he said, "but the economy is otherwise performing very well with more than two million job gains in the past year."
Continuing Problems with Inventory
The lack of inventory, however, continued to plague the housing market. By the end of November, there were 1.64 million units available for sale, down 7.3% from October and 5.7% from November 2018. At the current sales pace, it would take just 3.7 months for all inventory to sell. This was down from the 3.9-month supply recorded a month ago and the 4.0-month supply a year ago. For the past five months in a row, unsold inventory totals have fallen. This lack of inventory was largely responsible for the constricting home sales. According to Yun, "New home construction seems to be coming to the market, but we are still not seeing the amount of construction needed to solve the housing shortage." He believes the housing shortage could be solved through innovation in the building industry by using more factory-made modules to increase the number of affordable homes on the market.
Better Affordability
The economists at the summit also predicted that any mortgage rate increase in 2020 would be incremental. In addition, Yun believes that home price affordability will improve as well. "This year we witnessed housing costs grow faster than income, but the expectation is for prices to settle at a more reasonable level in the coming year in line with average hourly wage growth of 3% on a year-over-year basis."
More Showings
Low mortgage rates seemed to have piqued buyer interest. According to SentriLock’s foot traffic index, home showings remained stable from October to November at 47.1. Another measure of home showings—the "Realtors Buyer Traffic Index"—remained quite steady month to month, climbing to 56 in November from 55 a month earlier; in comparison, the index was at 44 a year ago. The increase in foot traffic led to homes being sold at a quick pace. The average property remained available for sale for 38 days in November; in comparison, properties remained on the market for 36 days in October and 42 days a year ago. Of all the homes sold in November, 45% were sold in less than a month.
Regional Sales Breakdown
Northeast - Existing-home sales annual rate of 700,000: an increase of 1.4% from October 2019; a decrease of 1.4% from November 2018. The median sales price increased 3.9% from November 2018.
Midwest - Existing-home sales annual rate of 1.32 million: an increase of 2.3% from October 2019; an increase of 1.5% from November 2018. The median sales price increased 5.9% from November 2018.
South - Existing-home sales annual rate of 2.24 million: a decrease of 3.9% from October 2019; an increase of 3.7% from November 2018. The median home price increased 4.8% from November 2018.
West - Existing-home sales annual rate of 1.09 million: a decrease of 3.5% from October 2019; an increase of 4.8% from November 2018. The median home price increased 7.1% from November 2018.
