After gaining ground in November and October, existing-home sales fell last month, dropping 6.4 percent to 4.99 million, the National Association of REALTORS® (NAR) reports. On an annual basis, sales toppled 10.3 percent.
Inventory month-to-month slid, as well, but has improved since last year, according to NAR. December inventory was 1.55 million, down from 1.74 million in November but up from 1.46 million in December 2017.
“The housing market is obviously very sensitive to mortgage rates,” says Lawrence Yun, chief economist at NAR. “Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today.”
Mortgage rates have recently reeled in, with the average 30-year fixed at 4.45 percent, according to Freddie Mac—an encouraging indicator for real estate this spring. “With mortgage rates lower, some revival in home sales is expected going into spring,” Yun says.
According to NAR President John Smaby, the government shutdown is also sowing uncertainty.
“The partial shutdown of the federal government has not had a significant effect on December closings, but the uncertainty of a shutdown has the potential to harm the market,” says Smaby. “Once the government is fully reopened, I am hopeful that housing transactions will increase.”
Across all house types (single-family, condo, co-op and townhome), the median price was $253,600, a 2.9 percent increase from the prior year, according to NAR. The median price in the single-family space was $255,200; the condo median was $240,600.
Activity disappointed in every major region of the U.S.:
Midwest
Existing-Home Sales: 1.19 million (-10.5% YoY)
Median Price: $191,300 (No Change)
Northeast
Existing-Home Sales: 690,000 (-6.8% YoY)
Median Price: $283,400 (+8.2% YoY)
South
Existing-Home Sales: 2.09 million (-8.7% YoY)
Median Price: $224,300 (+2.5% YoY)
West
Existing-Home Sales: 1.02 million (-15% YoY)
Median Price: $374,400 (+0.2% YoY)
Currently, inventory is at a 3.7-month supply, according to NAR. In December, existing-home sales averaged 46 days on market, six days longer than the prior year. Thirty-nine percent of homes were on the market for less than one month.
“Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home price appreciation,” says Yun, “but there is still a lack of adequate inventory on the lower-priced points and too many in upper-priced points.”
Month-over-month, sales in the single-family space tumbled from 4.71 million to 4.45 million, and came in 10.1 percent lower than they were the prior year, when they totaled 4.95 million. Condo and co-op sales sank to 540,000—a 12.9 percent drop month-over-month and an 11.5 percent drop year-over-year.
Twenty-two percent of sales were all-cash, and 13 percent by individual investors, according to NAR. Two percent were distressed. First-time homebuyers comprised 32 percent of sales.
The hottest markets, according to realtor.com®’s Market Hotness Index, which is included in NAR’s report, were Chico, Calif.; Midland, Texas; Odessa, Texas; Columbus, Ohio; and Fort Wayne, Ind.
Source: NAR