However, some of the decrease was likely because of an apparent rise in closing time frames that may have pushed some transactions into December, the report says.
It shows that all four major regions saw sales declines in November with total existing home sales down 10.5% to a seasonally adjusted annual rate of 4.76 million in November, the lowest since April 2014.
After last month's decline, the largest since July 2010 at 22.5%, sales are now 3.8% below a year ago, the first year on year decrease since September 2014.
According to Lawrence Yun, NAR chief economist, multiple factors led to November's sales decline, but the primary reason could be an anomaly as the industry adjusts to the new Know Before You Owe rule.
‘Sparse inventory and affordability issues continue to impede a large pool of buyers' ability to buy, which is holding back sales. However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it's highly possible the stark sales decline wasn't because of sudden, withering demand,’ he explained.
Yun believes that while estate agents are adjusting accordingly to the Know Before You Owe initiative, the main result so far has been the need for longer closing times. According to NAR's Realtors Confidence Index some 47% of respondents in November reported that they are experiencing a longer time to close compared to a year ago, up from 37% in October.
‘It's possible the longer time frames pushed a latter portion of would be November transactions into December. As long as closing timeframes don't rise even further, it's likely more sales will register to this month's total, and November's large dip will be more of an outlier,’ Yun pointed out.
The index also shows that pries are still rising. The median existing home price for all housing types in November was $220,300, 6.3% percent above November 2014 and the 45th consecutive month of year on year gains.
Total housing inventory at the end of November decreased 3.3% to 2.04 million existing homes available for sale and is now 1.9% lower than a year ago. Unsold inventory is at a 5.1-month supply at the current sales pace, up from 4.8 months in October.
NAR president Tom Salomone said that real estate agents worked hard to prepare for Know Before You Owe. ‘We knew there would be some near term challenges as the industry continues to adapt. Nonetheless, an early trend of longer lead times to closings is cause for concern,’ he commented.
He added that the NAR will continue to work with the Consumer Financial Protection Bureau to ensure as little disruption as possible to the business of real estate.
The latest data also shows that properties typically stayed on the market for 54 days in November, a decrease from 57 days in October and below the 65 days in November 2014. Short sales were on the market the longest at a median of 91 days in November, while foreclosures sold in 47 days and non-distressed homes took 54 days and 37% of homes sold in November were on the market for less than a month.
The percent share of first time buyers was 30% in November, down from 31% both in October and a year ago. Despite first time buyers' continued absence from the market, NAR's inaugural quarterly Housing Opportunities and Market Experience survey released earlier this month found that 94% of current renters who are 34 years of age or younger want to own a home in the future. The top reason given by renters for not currently owning was the inability to afford to buy.
There is also concern about how the recent rise in short term interest rates announced by the Federal Reserve will impact the property market as it is expected to be the first of many increases over the next couple of years.
‘Although this first move will likely have minimal impact on mortgage rates, additional hikes will push borrowing costs to around 4.5% the end of next year. With home prices expected to continue rising, wages and new home construction need to start increasing substantially to preserve affordability,’ said Yun.
Matching the highest share since January, all-cash sales rose to 27% of sales in November, up from 24% in October and up from 25% a year ago. Individual investors, who account for many cash sales, purchased 16% of homes in November, also the highest since January, and up both from 13% in October and 15% a year ago. Some 64% of investors paid cash in November.
Distressed sales, foreclosures and short sales were 9% in November, up from 6% in October but unchanged from a year ago. Some 7% of November sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 15% below market value in November compared to 18% in October, while short sales were discounted 15% compared to 8% in October.
A breakdown of the NAR figures shows that single family home sales dropped 12.1% to a seasonally adjusted annual rate of 4.15 million in November and are now 4.6% lower than the 4.35 million pace a year ago. The median existing single family home price was $221,600 in November, up 6.6% from November 2014.
Existing condominium and co-op sales increased 1.7% to a seasonally adjusted annual rate of 610,000 units in November and are now 1.7% above November 2014. The median existing condo price was $211,400 in November, 4.7% above a year ago.
November existing home sales in the Northeast declined 9.2% to an annual rate of 690,000, but are still 1.5% above a year ago. The median price in the Northeast was $254,800, which is 3.2% above November 2014.
In the Midwest, existing home sales fell 15.4% to an annual rate of 1.10 million in November and are now 2.7% below November 2014. The median price in the Midwest was $169,300, up 5.3% from a year ago.
Existing home sales in the South decreased 6.2% to an annual rate of 1.98 million in November and are now 5.7% below November 2014. The median price in the South was $189,400, up 6.3% from a year ago.
The data also shows that existing home sales in the West dropped 13.9% to an annual rate of 990,000 in November and are now 4.8% lower than a year ago. The median price in the West was $319,700, which is 8.3% above November 2014.
