Why Sales Fell Short at Year’s End
January 24, 2018
Existing-home sales in 2017 surged to the best year for sales in 11 years, the National Association of REALTORS® reported Wednesday.
Total existing-home sales—which include completed transactions for single-family homes, townhomes, condos, and co-ops—rose 1.1 percent in 2017 to a 5.51 million sales pace. The sales pace surpassed 2016’s 5.45 million, which had been the highest pace since 2006.
However, the end-of-the-year sales numbers were overcast somewhat by a slower sales pace in December. Existing-home sales decreased 3.6 percent in December month over month to a seasonally adjusted annual rate of 5.57 million.
“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multistreak of exceptional job growth, which ignited buyer demand,” says Lawrence Yun, NAR’s chief economist. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.”
Closings scaled back in most areas of the country in December due to affordability and inventory woes, Yun adds. “Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale,” Yun says.
Market Snapshot for December
Here are some key highlights from NAR’s latest housing report:
- Home prices: The median existing-home price for all housing types in December was $246,800, which is 5.8 percent higher than a year ago.
- First-time buyers: First-time home purchasers comprised 32 percent of sales in December, up from 29 percent in November.
- Days on the market: Forty-four percent of homes sold in December were on the market for less than a month. Properties typically stayed on the market for 40 days in December, down from 52 days a year ago.
- All-cash transactions: All-cash sales comprised 20 percent of transactions in December, which is down slightly from 21 percent a year ago. Individual investors, who make up the bulk of cash sales, accounted for 16 percent of the homes sold in December, up from 14 percent a year ago.
- Distressed sales: Foreclosures and short sales made up 5 percent of sales in December, down from 7 percent a year ago. Broken out, 4 percent of December’s sales were foreclosures and 1 percent were short sales.
- Inventory: Total housing inventory fell 11.4 percent in December to 1.48 million existing homes available for sale. Inventory is now 10.3 percent lower than a year ago. Unsold inventory is at a 3.2-month supply at the current sales pace, which is the lowest level since NAR began tracking such data in 1999.
“The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains—at 5.8 percent nationally in 2017—doubled the pace of income growth and were even swifter in several markets,” Yun explains.
Updated: June 05, 2020