Led by strong sales in the South and West, existing-home sales rose 14.7 percent in December, which the National Association of Realtors (NAR) attributes to buyers reaching the market before the end of the year. The NAR also observed that “the delayed closings resulting from the rollout of the Know Before You Owe initiative pushed a portion of November’s would-be transactions into last month’s figure.”
December marks the largest monthly increase ever recorded, and a 7.7 percent rise from the previous December.
Dr. Lawrence Yun, NAR chief economist, says December’s robust bounce back caps off the best year of existing sales since 2006.
Dr. Yun observes, “the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”
Prices up, inventory down
The median existing-home price rose 7.6 for the year, hitting $224,100 in December, marking the 46th consecutive month of year-over-year gains.
Housing inventory fell 12.3 percent in December for the month, and 3.8 percent for the year.
At the current sales pace, unsold inventory is at a 3.9-month supply, down from 5.1 months in November, and the lowest since January 2005’s 3.6 months.
Who’s in the market right now?
The percent share of first-time buyers was at 32 percent in December; this share has hovered around 30 percent for over a year now.
Cash sales represented 24 percent of transactions, with 15 percent being individual investors.
Time on market
NAR reports, “Properties typically stayed on the market for 58 days in December, an increase from 54 days in November but below the 66 days in December 2014.”
It’s no surprise that short sales were on the market for the longest (at a median of 86 days in December), while foreclosures sold in 68 days, and non-distressed homes averaged 57 days.
What’s in store going forward
Dr. Yun notes, “Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s 7 percent increase in sales. In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas.”
Trulia’s brand new Chief Economist, Dr. Ralph B. McLaughlin shared his insight as well. “We should expect next month’s numbers to stabilize from the erratic November and December swings as agents and lenders continue to adapt to these new lending regulations.”
Dr. McLaughlin also noted that “the Federal Reserve’s decision to increase interest rates by 0.25% last month didn’t impact existing home sales, since mortgage rates have actually dropped sharply over the past month.”