Existing-home sales finished out 2016 as the best year since the housing boom days, the National Association of REALTORS® reported Tuesday.
Total existing-home sales – which are completed transactions that include single-family homes, townhomes, condos, and co-ops – closed 2016 at 5.45 million sales, surpassing 2015 (5.25 million). It was the highest total for existing-home sales since 2006 (6.48 million), NAR reported.
“Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” says Lawrence Yun, NAR’s chief economist. “However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.
The final month of 2016 saw existing-home sales drop 2.8 percent to a seasonally adjusted annual rate of 5.49 million, NAR reported. Sales in December were now only 0.7 percent higher than a year ago. Low housing supplies continue to press on the market.
“While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end,” Yun says.
5 Key Stats From December’s Housing Report
Here’s a closer look at some key indicators from NAR’s December existing-home sales report.
1. Home prices:
Median existing-home price for all housing types in December was $232,200, up 4 percent from a year ago ($223,200).
2. Days on the market:
Thirty-seven percent of homes sold in December were on the market for less than a month. Properties, on average, stayed on the market for 52 days in December, up from 43 days in November but down from a year ago (58 days). Non-distressed homes took an average of 50 days to sell while short sales sales took the longest at a median of 97 days on the market in December. Foreclosures sold in 53 days, on average.
3. Cash sales:
All-cash sales comprised 21 percent of transactions in December, down from 24 percent a year ago. Individual investors make up the bulk of cash sales. They accounted for 15 percent of homes purchased in December, unchanged from a year ago.
4. Distressed sales:
Foreclosures and short sales ticked up to 7 percent in December, up from 6 percent in November. Still, distressed sales are down from 8 percent a year ago. Foreclosures made up 5 percent of sales in December while short sales comprised 2 percent of sales. Foreclosures sold for an average discount of 20 percent below market value in December while short sales were discounted 10 percent.
Total housing inventory at the end of December fell 10.8 percent to 1.65 million existing homes available for sale -- the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory is now 6.3 percent lower than a year ago. It is at a 3.6-month supply at the current sales pace.
“Housing affordability for both buying and renting remains a pressing concern because of another year of insufficient home construction,” says Yun. “Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production.”
Source: National Association of REALTORS®