Monthly Home Sales Increase Despite a Lack of Affordable Homes
According to the National Association of Realtors (NAR), existing-home sales reached 5.32 million in November; this marks the second month in a row of month-over-month sales gains. What’s more, three of the four major real estate markets in the country reported increases in sales activity. According to Lawrence Yun, chief economist for the NAR, “The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago.”
Sales may have increased in November, but properties spent more time on the market. The average home remained available for sale for 42 days in November, up from 36 days a month ago and 40 days a year ago. Of all the homes sold in November, 43 percent remained on the market for less than a month.
Fewer Affordable Homes
By the end of November, there were 1.74 million existing homes available for sale, down from 1.85 a month earlier. At the same time last year, however, there were only 1.67 million homes on the market. At the current sales pace, it would take 3.9 months for the current housing inventory to sell, down from 4.3 months in October but up from 3.5 months in November 2017. According to the NAR, this increase in inventory is tempering the previous rapid growth in home prices—a boon for home buyers. Yet the year-over-year increase in inventory is not across all sectors of the housing market. At the upper end of the market, there is a steady supply of homes, but a mismatch between supply and demand exists at the more affordable end of the market. Therefore, according to Yun, “Facilitating real estate development of affordable housing units in designated Opportunity Zones can provide better housing access in addition to boosting the local economy.”
Successful First Buys
Though faced with a lack of supply that might not be meeting their demands, first-time buyers still found success in the housing market. This group accounted for 33 percent of all sales in November, up from 31 percent a month ago and 29 percent a year ago. According to the NAR’s 2018 Profile of Home Buyers and Sellers, first-time buyers made up 33 percent of the market in 2018.
Northeast – Existing-home sales annual rate of 740,000; an increase of 7.2 percent from October but a decrease of 2.6 percent from November 2017. Median prices climbed 6.5 percent year over year.
Midwest – Existing-home sales annual rate of 1.34 million; an increase of 5.5 percent from October but a decrease of 4.3 percent from November 2017. Median prices climbed 2.6 percent year over year.
South – Existing-home sales annual rate of 2.2 million; an increase of 2.3 percent from October but a decrease of 5.6 percent from November 2017. Median prices climbed 3.2 percent year over year.
West – Existing-home sales annual rate of 1.04 million; a decrease of 6.3 percent from October and 15.4 percent from November 2017. Median prices climbed 1.8 percent year over year.