November 2017 Existing Home Sales

Sales of existing homes jumped in November 2017 according to the National Association of Realtors. Accelerating 5.6 percent in the period, sales totaled 5.81 million units on a seasonally adjusted annualized basis. November’s sales pace is the strongest in over a decade. Additionally, October’s tally was upwardly revised to 2.4 percent (originally 2.0 percent). With just one month of data left to collect, it appears this marketplace in ending 2017 on a high note.

Despite the strong national tally, only three of the four regions improved in the period. Midwest sales jumped 8.4 percent and grew 6.8 percent in the past twelve months. Transactions in the South surged 8.3 percent and are up 4.0 percent versus a year ago. Existing home sales in the East expanded 6.7 percent and gained 4.0 percent compared to the same period in 2016. Unfortunately, the West did not follow the rest of the country as transactions declined 2.3 percent for the month, but the year-over-year comparison remains positive, growing 2.5 percent.

Inventory continued tightening in the period. The number of available homes for sales dropped 7.2 percent to just 1.67 million units. This decline puts the number of homes for sale 9.7 percent lower than a year ago. November is the 30th straight month of declining year-over-year inventory. At the current sales pace, the entire stock of existing homes would be gone in just 3.4 months if no other for-sale signs were posted.

Interest rates climbed for the second consecutive month. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage reached 3.92 percent, up marginally from 3.9 percent in October. For comparison, the average commitment rate during 2016 was 3.65 percent, so there is some upward pressure on these rates.

Headline optimism might be masking some underlying issue in this segment of the economy. Inventories are behaving oddly given strong sales growth. Factors keeping the housing supply from moving closer to historical norms remain unclear at this time. This mystery causes Atlas to consider this portion of the indicator the most intriguing even as the headline figure reaches highs not seen in over a decade.