November existing home sales bucked expectations and posted a 0.7% increase to an annualized 5.61 million homes. Economists were looking for a 1.8% decline to about 5.50 million homes on an annualized basis. The increase puts the number at a 9 year high basically on the same levels as before the economic collapse began.
Sales in the Northeast led the charge with an whopping 8% increase as buyers took advantage of lagging prices. The Midwest declined 2.2%, we had a 1.4% gain in the South, and a 1.6% dip in the West.
The threat of higher interest rates also contributed as buyers are trying to stay ahead of Janet Yellen and the Fed.
— NAR Research (@NAR_Research) December 21, 2016
Experts are also pointing to low low inventory numbers and suggest that but for the lack of supply the resale number might have been even more robust. For November the inventory levels were 9.3% lower year over year.
Tight inventory continues to contribute to the increase in prices and for both sales and rentals. “As a result, both home prices and rents continue to far outstrip incomes in much of the country,” Lawrence Yun, the NAR’s chief economist averred.
Also while buyers are scrambling to beat additional rate increases, Mark Fleming, chief economist at First American, wrote “Home price appreciation is typically more sensitive to mortgage rate increases and I expect to see a decline in the house price growth rate of almost a full percentage point by the end of 2017.”
We home to get a little more clarity on the inventory issue in the upcoming new home sales report and new home starts.