Existing-home sales have risen for the second consecutive month, continuing the upward trend after a six-month slump that lasted from April to September.
Existing-home sales increased 1.9 percent month-over-month but failed to gain the same traction on a yearly basis with a 7 percent decline from November 2017, according to the latest data from the National Association of Realtors released on Wednesday.
“The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago,” said NAR Chief Economist Lawrence Yun in a prepared statement. “Rising inventory is clearly taming home price appreciation.”
Home prices continued to rise, with the median existing home price reaching $257,700 in November – a 4.2 percent year-over-year gain. The price increase marks the 81st straight month of year-over-year median existing home prices gains.
Unsold inventory is at a 3.9-months supply level, at the current sales pace, which is down from 4.3 months in October, but up from 3.5 months a year ago.
Although October and November’s existing-home sales are a much-needed improvement from the beginning of 2018, Bloomberg economist Yelena Shulyatyeva says it’s not time to celebrate just yet.
“The rise in interest rates has affected not only home sales statistics, but also housing starts and permits data, as well as the latest payroll numbers,” said Shulyatyeva in her report. “It is unlikely that the November increase in existing home sales marks the beginning of a new upward trend.”
“The regional data provide a reminder that until affordability improves, we are unlikely to witness a sustainable acceleration in demand,” she added.
NAR’s report echoed Shulyatyeva’s statement, noting affordability issues at the lower end of the market where inventory remains slim.
“A marked shift is occurring in the West region, with much lower sales and very soft price growth,” said Yun. “It is also the West region where consumers have expressed the weakest sentiment about home buying, largely due to lack of affordable housing inventory.”
“Inventory is plentiful on the upper-end, but a mismatch between supply and demand exists at affordable price points,” he added. “Therefore, facilitating real estate development of affordable housing units in designated Opportunity Zones can provide better housing access in addition to boosting the local economy.”
Regionally, sales were up, month-over-month, in every region but the West, where sales declined 6.3 percent from October and 15.4 percent from last year.