Existing-home sales fall for first time in 5 months

Existing-home sales declined 2.5 percent in November to a seasonally-adjusted rate of 6.69 million units, representing a 25.8 percent increase in sales versus a year ago. In a new Macro Data Flash report, NAFCU’s Nadir Tekarli notes that although existing-home sales have dipped for the first time in five months, they’re still near the highest level since 2006.

“Historically low mortgage rates continue to fall and fuel homebuying, though housing inventory falling to a 20-year low is hindering further sales growth,” wrote Tekarli, NAFCU’s research assistant.

Based on current sales, there was 2.3 months of supply at the end of November, down 0.2 from October. Analysts consider six months of supply to be roughly balanced between supply and demand.

“With the Fed keeping rates low through at least 2022, low mortgage rates will be a tailwind into the medium-term. Luckily, construction is picking up the pace with new housing starts rising to 1.19 million annualized units in November, the highest level since 2007,” Tekarli added. “Tight inventory and high prices in the existing homes market may convince a growing subsection of buyers to purchase new homes instead.

 

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