Economy: Existing Home Sales During December 2017

The Existing Home Sales report for December 2017 was released by The National Association of Realtors® (NAR) this morning:

Predicted: 5,750,000
Actual: 5,570,000

Change from Previous Month: -3.6%
Change from One Year Previous: +1.1%

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Inventory: 1,480,000 (3.2 months supply)

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The yellow-highlighted, "actual" figure above represents the preliminary, seasonally adjusted annualized sales count of existing homes, co-ops and condominiums for the indicated month. The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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Median Price for A Used Home During December 2017: $246,800

Change from One Year Previous: +5.8%

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Average Price for A Used Home During December 2017: $288,200

Change from One Year Previous: +4.8%

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Click here for historical prices and a chart.

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From today's report:

"...Lawrence Yun, NAR chief economist, says the housing market performed remarkably well for the U.S. economy in 2017, with substantial wealth gains for homeowners and historically low distressed property sales. 'Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,' said Yun. 'At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.'

Added Yun, 'Closings scaled back in most areas last month for this same reason. Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.'

'The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains – at 5.8 percent nationally in 2017 – doubled the pace of income growth and were even swifter in several markets,' said Yun.

First-time buyers were 32 percent of sales in December, which is up from 29 percent in November and unchanged from a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34 percent.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage inched higher for the third straight month to 3.95 percent in December from 3.92 percent in November. The average commitment rate for all of 2017 was 3.99 percent.

'Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers,' said Yun. 'However, if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners.'

Properties typically stayed on the market for 40 days in December, which is unchanged from November and down from a year ago (52 days). Forty-four percent of homes sold in December were on the market for less than a month.

Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in December were San Jose-Sunnyvale-Santa Clara, Calif.; San Francisco-Oakland-Hayward, Calif.; Vallejo-Fairfield, Calif.; Colorado Springs, Colo.; and Stockton-Lodi, Calif.

NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says improving the new tax law is a top priority for Realtors® in 2018. 'Especially in high-cost, high-taxed markets, there’s still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time,' she said. 'As the housing market adjusts to the new law, Realtors® will be listening to their clients and communicating to lawmakers ways to ensure owning a home is truly incentivized in the tax code.'..."