Existing home sales in the United States surged for a third month in a row in November and reached their strongest pace in almost 11 years, the latest national index shows.
The median price for all housing types in November was $248,000, up 5.8% from November 2016 and prices have now increased year on year for 69 months in a row.
All major regions except for the West saw a significant rise in sales activity, up 5.6% overall month on month and the data from the National Association of Realtors (NAR) also shows that they are now 3.8% higher than a year ago.
Faster economic growth in recent quarters, the booming stock market and continuous job gains are fuelling substantial demand from buyers, according to Lawrence Yun, NAR chief economist.
But he also revealed that the rise is not coming from first time buyers. In November it was a rise in cash buyers and those with considerable down payments moving up the housing ladder that led to a surge in sales. ‘The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better,’ he explained.
The index report shows that supply continues to fall. Total housing inventory at the end of November was down by 7.2% to 1.67 million and is now 9.7% lower than a year ago. It has fallen year on year for 30 months in a row.
The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist, according to Yun. ‘Price appreciation is too fast in a lot of markets right now. The increase in home builder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages,’ he pointed out.
Overall first time buyers accounted for 29% of sales in November, down from 32% both in October and a year ago and down from the 34% recorded earlier this year. All cash sales made up 22% or the market, up from 20% in October.
‘The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first time buyers are experiencing. The healthy labour market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for would be home owners will only improve if more lower priced and smaller sized homes come onto the market,’ Yun explained.
A breakdown of the figures show that sales increased by 6.7% in the North East and the median price was up 4% year on year to $273,600 while in the Midwest sale rose 8.4% and are 6.8% above a year ago. The median price was $196,100, up 8.8% from a year ago.
Sales the South jumped 8.3% and are4% higher than a year ago with a median price of $216,200, up 4.8% year on year. In the West sales fell by 2.3% but are still 2.5% above a year ago. The median price was $375,100, up 8.2% from November 2016.
