Existing-home sales hit three-year high

By Vicki Needham - 12/20/12 01:43 PM ET

Sales of existing homes shot up to their highest level in three years last month as the housing market's steady recovery continues.

Total sales, which are completed transactions that include single-family homes, townhomes and condominiums, rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October, the National Association of Realtors reported on Thursday.

The sales pace is 14.5 percent higher than it was a year ago and is at the highest level since November 2009 when the annual pace spiked at 5.44 million.

A sales pace of 5.5 million usually means the market is healthy.

"Momentum continues to build in the housing market from growing jobs and a bursting out of household formation," said Lawrence Yun, NAR chief economist.

"With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes."

Areas hit by Hurricane Sandy showed storm-related disruptions but overall activity in the Northeast was up 6.9 percent.

Sales were up across the nation's other three regions, too.

The Midwest saw a 7.2 percent increase in November, sales in the South were up 7.9 percent and the West saw sales rise by 0.8 percent.

The gradually improving job market and low mortgage rates are contributing factors to the improvement.

Employers added 146,000 jobs last month and those interested in purchases are seeing historically low mortgage rates — Freddie Mac said that a 30-year fixed-rate mortgage fell to a record low 3.35 percent in November.

The national median existing-home price for all housing types was $180,600 in November, up 10.1 percent from November 2011 as inventory tightens.

The increase represents the ninth consecutive monthly year-over-year price gain, which last occurred from September 2005 to May 2006.

Total housing inventory at the end of November fell 3.8 percent to 2.03 million existing homes, a 4.8-month supply. That is a drop from 5.3 months in October, and is the lowest housing supply since September of 2005 when it was 4.6 months

The sale of distressed homes, foreclosures and short sales sold at deep discounts, slowed last month, accounting for 22 percent of November sales, down from 29 percent in November 2011.

"The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages," Yun said.

First-time buyers accounted for 30 percent of purchases in November, down from 31 percent in October and 35 percent in November 2011.

All-cash sales represented 30 percent of transactions in November, up slightly from 29 percent in October.

Investors, who account for most cash sales, purchased 19 percent of homes in November, which is mostly unchanged from the past year.