NAR: Existing-Home Sales Inch Up in November

Daily Real Estate News | December 31, 2007
NAR: Existing-Home Sales Inch Up in November
Existing-home sales rose slightly in November, indicating a stabilization in housing in the wake of mortgage disruptions earlier this year, according to the National Association of REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — rose 0.4 percent to a seasonally adjusted annual rate of 5 million units in November. That represents a slight increase from an upwardly revised pace of 4.98 million in October.

However, existing-home sales are 20 percent below the 6.25 million-unit level in November 2006.

“Near term, existing-home sales should continue to hover in a narrow range, just as they have since September, and that’s good news because it’ll be a further sign that the housing market is stabilizing,” says NAR Chief Economist Lawrence Yun. “Mortgage interest rates are near historic lows and the most current data shows decelerating price declines, along with a modest reduction in the number of homes on the market.”

Disruptions in mortgage availability and pricing peaked in August, which caused sales to slow in subsequent months, according to NAR.

Housing Stats

The national median existing-home price for all housing types was $210,200 in November, down 3.3 percent from November 2006 when the median was $217,300. But there remains a downward drag on the national median as the mix of closed sales has shifted away from expensive markets.

“Just like the weather, there are large local variations in home prices,” Yun says.

A quarterly examination of price performance on a metropolitan basis shows nearly two-thirds of metro areas are showing price increases. Among the many metros experiencing healthy local price gains are Farmington, N.M.; Reading, Pa.; Columbia, S.C., and Fargo, N.D.

Here’s how single-family and condo existing-home sales fared:

Single-family homes: rose 0.7 percent to a seasonally adjusted annual rate of 4.4 million in November from 4.37 million in October, but are 19.9 percent below the 5.49 million-unit pace in November 2006. Median home price: $208,700 in November, down 3.7 percent from a year earlier.
Existing condominium and co-ops: slipped 1.6 percent to a seasonally adjusted annual rate of 600,000 units in November from 610,000 in October, and are 20.6 percent below the 756,000-unit level in November 2006. Median existing condo price: $221,100, down 0.7 percent from in November 2006.

Meanwhile, total housing inventory declined 3.6 percent at the end of November to 4.27 million existing homes available for sale. That represents a 10.3-month supply at the current sales pace, down from a 10.7-month supply in October.

“Inventory is still high, and further reduction in prices may be required in some areas to induce buyers back into the market,” Yun says.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.21 percent in November from 6.38 percent in October; the rate was 6.24 percent in November 2006.

Regional Breakdown

Here’s what happened with existing-home sales across the country:

West: increased 10.3 percent in November to a level of 960,000, but are 25 percent below a year ago. Median price: $325,800, which is 6.8 percent lower than November 2006.
Midwest: existing-home sales were unchanged at an annual rate of 1.18 million in November, but are 16.9 percent below November 2006. Median price: $163,000, down 0.5 percent from a year ago.
South: declined 2 percent to an annual rate of 1.99 million in November, and are 19.4 percent below a year ago. Median price: $174,200, which is 2.5 percent below November 2006.
Northeast: fell 3.3 percent to an annual pace of 870,000 in November, and are 19.4 percent below November 2006. Median price: $258,300, down 3.2 percent from a year ago.

Legislative Action Needed

To help the housing market rebound, NAR President Dick Gaylord says that Congress should expand affordable financing.

“Consumers have some choices with safer conventional financing, but raising the limit on conforming loans would significantly revive home sales,” he says. “This would help creditworthy buyers in hard hit regions — like California and Florida — by greatly increasing access to low-interest-rate mortgages.”

— REALTOR® Magazine Online