Existing Home Sales Increase 3.6% in December, Beating Forecast

Single Family Existing Home Sales 10.6% Higher than Last Year

Existing home sales rose 3.6% in December after falling slightly in November, and are now 10.8% higher than one year ago (5.00 million in December 2018). The monthly housing market indicator beat the forecast.

The National Association of Realtors (NAR) reported total existing home sales—defined as completed transactions for single-family homes, townhomes, condominiums and co-ops—increased to a seasonally-adjusted annual rate of 5.54 million in December.

Forecasts ranged from a low of 5.370 million to a high of 5.500 million. The consensus forecast was 5.430 million.

On a full-year basis, total existing home sales closed out 2019 at 5.34 million, a level unchanged from 2018. Existing home sales in the South (+2.2%) offset declines in the West (-1.8%) and Midwest (-1.6%), while the Northeast remained unchanged.

“I view 2019 as a neutral year for housing in terms of sales,” Mr. Yun said. “Home sellers are positioned well, but prospective buyers aren’t as fortunate.”

“Low inventory remains a problem, with first-time buyers affected the most.”

The median existing home price for all housing types was $274,500 in December, an increase of 7.8% from December 2018 ($254,700). Prices rose in every region and November marks 94 straight months of year-over-year increases.

“Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” Mr. Yun added. “The hope is for price appreciation to slow in line with wage growth, which is about 3%.”

Total housing inventory at the end of December totaled 1.40 million units, down 14.6% from November and 8.5% from one year ago (1.53 million). Unsold inventory is now at a 3.0-month supply at the current sales pace, down from the 3.7-month supply in both November and December 2018.

The number of days properties typically remained on the market rose to 41 in December from 38 days in November, though that’s down from 46 days in December 2018. Forty-three percent (43%) of homes sold in December 2019 were on the market for less than a month.

While unsold inventory totals fell for seven consecutive months on a year-over-year basis, Mr. Yun argues the market for existing home sales is favorable to buyers and is expected to improve in 2020.

“We saw the year come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4% and housing starts ramp up to 1.6 million on an annual basis,” he said. “If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020.”

“NAR is expecting 2020 to be a great year for housing,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, California. “Our leadership team is hard at work to secure policies that will keep our housing market moving in the right direction, like promoting infrastructure reform, strengthening fair housing protections and ensuring mortgage capital remains available to responsible, mortgage-ready Americans.”

Existing Single-Family Home Sales

Single-family home sales came in at a seasonally-adjusted annual rate of 4.92 million in December, up from 4.79 million in November and 10.6% higher than a year ago. The median existing single-family home price was $276,900 in December 2019, an increase of 8.0% from December 2018.

Regional Existing Home Sales

Existing home sales in the Northeast rose 5.7% to an annual rate of 740,000, up 8.8% from a year ago. The median price in the Northeast was $304,400, up 7.4% from December 2018.

In the Midwest, existing home sales fell 1.5% to an annual rate of 1.30 million, though that’s still up 9.2% from a year ago. The median price in the Midwest was $208,500, also a 9.2% gain from last December.

Existing home sales in the South increased 5.4% to an annual rate of 2.36 million in December, jumping 12.4% higher than a year ago. The median price in the South was $240,500, a 6.7% increase from one year ago.

In the West, existing home sales gained 4.6% to an annual rate of 1.14 million in December, a 10.7% increase from a year ago. The median price in the West was $411,800, up 8.1% from December 2018.