A month in review: The November housing market

Every month, economists release a number of indices, reports and analyses of the housing market, and it can be difficult to keep up with them all.

Thankfully, the National Association of Realtors (NAR) recapped the month in its new Housing Minute monthly video series.

November existing-home sales increased 5.6 percent to a seasonally adjusted annual rate (SAAR) of 5.81 million — up from a upwardly revised 5.50 million in October, and home sales prices rose 5.8 percentage points to $248,000.

• November’s sales pace grew 3.8 percentage points above November 2016, and is the strongest sales pace since December 2006 (6.42 million).
• Total housing inventory fell 7.2 percent points month-over-month to 1.67 million homes for sale, while year-over-year inventory dropped 9.7 percentage points, its 30th consecutive month of year-over-year declines.
• NAR chief economist Lawrence Yun says “move-up” buyers and all-cash buyers are driving the market, leaving first-time buyers who can’t compete in the dust.
• “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,” said Yun. “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.

Pending home sales experienced a small uptick as well. The PHSI increased 0.2 percentage points to 109.5 from 105.3 in October. 

• NAR chief economist Lawrence Yun says the PHSI increase is due to a strong jobs market and an overall healthy economy, but the PHSI and existing-home sales are expected to slow in 2018 due to continued inventory shortages and tax bill concerns that may stave off new buyers.
• “New buyers coming into the market are finding out quickly that their options are limited and competition is robust,” he said. “Realtors say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home.”

New residential home sales rose 17.5 percent month-over-month and a 26.6 percent year-over-year according to the U.S. Census Bureau. 

• New single-family home sales rose to a seasonally adjusted rate of 733,000, and the estimate of new homes for sale at the end of November was 283,000.
• The median sales price was $318,700.
• The West led the way in new residential home sales, with a 31.1 (+/- 26.5)* percent month-over-month increase.

With sluggish inventory growth and skyrocketing home price growth predicted to stick around, multiple economists have dubbed 2018 “The Year of the Seller.” 

• Although housing starts were at 1.297 million in November, it’s economists and housing experts alike say it will be challenging to reach the 50-year average of 1.5 million new homes.
• “Builders have been ramping up somewhat over the past year, and that should continue going forward,” said Svenja Gudell, chief economist at Zillow. “But in order to satisfy demand from entry-level buyers in particular, builders will need to find more affordable sites farther from job centers.”
• Although many market factors favor sellers, Redfin chief economist Nela Richardson says rising mortgage rates and housing-related changes to the tax code, may weaken the leverage sellers have over buyers.
• “I think you’re going to see sellers have less pricing power than they did this year, particularly in states like New York and California,” said Richardson. “Buyers are going to be ready to play hardball because they’re not getting as much from buying the house as they did this year. And maybe less pricing power in other places, too, because consumers can only pay so much and prices have gone up so strongly.”

Email Marian McPherson.