Sales of existing homes reach highest level in nearly a decade

Sales of existing homes reach highest level in nearly a decade
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A surge in existing-home sales in the Northeast boosted overall gains in November to the highest level since February 2007.

The National Association of Realtors said Wednesday that total sales, which are completed transactions that include single-family homes and condominiums, rose 0.7 percent to a seasonally adjusted annual rate of 5.61 million in November from 5.57 million in October.

November’s sales gains wrap up a strong three-month stretch that have seen sales rise 15.4 percent higher than a year ago.

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“The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months,” said Lawrence Yun, NAR chief economist.

Mortgage rates have been on the rise since the November election.

“Furthermore, it’s no coincidence that home shoppers in the Northeast, where price growth has been tame all year, had the most success last month,” Yun said.

The median existing-home price in November for all housing types was $234,900, up 6.8 percent from November 2015.

Housing inventory last month dropped 8 percent to 1.85 million existing homes available for sale, and is now 9.3 percent lower than a year ago. Inventory has fallen year-over-year for 18 straight months.

Unsold inventory is at a four-month supply at the current sales pace, which is down from 4.3 months in October, making it more difficult for house hunters to find a suitable home to purchase.

“Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017,” Yun said. “Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country,” he said.

Rates for a 30-year, conventional, fixed-rate mortgage leaped to 3.77 percent in November from 3.47 percent in October, according to Freddie Mac.

The average rate in 2015 was 3.85 percent.

First-time buyers were 32 percent of sales in November, which is down slightly from 33 percent in October.

“First-time buyers in higher-priced cities will be most affected by rising prices and mortgage rates next year and will likely have to stretch their budget or make compromises on home size, price or location,” Yun said.

Meanwhile, all-cash sales were 21 percent of transactions last month, down from 22 percent in October and 27 percent a year ago.

Individual investors, who account for many cash sales, purchased 12 percent of homes in November, down from 13 percent in October and 16 percent a year ago.

Overall, 58 percent of investors paid in cash in November, which matches the lowest share since August 2009.

Distressed sales — foreclosures and short sales — rose to 6 percent in November, up from 5 percent in October but down from 9 percent a year ago.

Single-family home sales declined 0.4 percent to a seasonally adjusted annual rate of 4.95 million in November from 4.97 million in October, but are still 16.2 percent above the 4.26 million pace a year ago.

Existing condominium and co-op sales jumped 10 percent to a seasonally adjusted annual rate of 660,000 units in November, and are now 10 percent above a year ago.

Regionally, sales in the Northeast jumped 8 percent and rose 1.4 percent in the South. Sales declined 2.2 percent in the Midwest and fell 1.6 percent in the West.