Although most of the country experienced a decline in existing home sales in December, 2017 overall was the best year for sales in 11 years. They were up 1.1 percent from 2016, according to a recent report from the National Association of Realtors.
In 2016, total existing home sales, comprised of single-family homes, townhomes, condominiums and co-ops, reached 5.45 million. Last year, total existing home sales rose to 5.51 million sales, the most since 6.48 million in 2006.
Despite the yearly increase, existing home sales fell 3.6 percent in December to a seasonally adjusted annual rate of 5.57 million from November’s 5.78 million.
Noting substantial wealth gains for homeowners and historically low distressed property sales in 2017, NAR chief economist Lawrence Yun says the housing market performed remarkably well in 2017 despite some challenges.
“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” Yun said. “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 last month for this same reason,” he continued. “Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”
A top priority for Realtors in 2018 is improving the new tax law, NAR President Elizabeth Mendenhall said.
“Especially in high-cost, high-taxed markets, there’s still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time,” she said. “As the housing market adjusts to the new law, Realtors will be listening to their clients and communicating to lawmakers ways to ensure owning a home is truly incentivized in the tax code.”
December continues trend of higher home prices, falling inventory
In December, the median existing home price for all housing types was $246,800, up 5.8 percent from $233,330 from December 2016.
For 31 consecutive months, total housing inventory in the U.S. has dropped year-over-year. Total housing inventory is now 10.3 percent below what it was a year ago. By the end of December, inventory had fallen 11.4 percent to 1.48 million existing homes available for sale.
There’s now 3.2 months of unsold inventory, which is down from 3.6 months a year ago — the lowest it has been since 1999 when the NAR began tracking it.
“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 said.
Homes spent an average of 40 days on the market in December, unchanged from November but a decrease from the 52-day average a year ago. Of the homes sold in December, 44 percent were on the market for less than a month.
Though December’s single-family home sales declined 2.6 percent to 4.96 million from November, they were still higher the 4.91 million pace of a year ago by 1 percent. Meanwhile, the median existing single-family home price in December was $248,100, up 5.8 percent from last year.
Existing condominium and co-op sales dropped 11.6 percent in December to a seasonally adjusted annual rate of 610,000 units in December, though still up 1.7 percent from last year. The median existing condo price in December rose 6.4 percent from last year to $236,500.