November 2017 Headline Existing Home Growth Improves

The headline existing home sales growth improved with the authors saying “home sales in most of the country expanded at a tremendous clip in November”. Our analysis of the unadjusted data somewhat disagrees with the headline data.

Analyst Opinion of Existing Home Sales

The rolling averages have been slowing in 2017 – but they again marginally accelerated this month. The rolling averages are in expansion.

Econintersect Analysis

Unadjusted sales rate of growth decelerated 0.7 % month-over-month, up 2.1 % year-over-year – sales growth rate trend accelerated using the 3 month moving average.

Unadjusted price rate of growth accelerated 0.4 % month-over-month, up 4.8 % year-over-year – price growth rate trend marginally accelerated using the 3 month moving average.

The homes for sale inventory significantly declined this month, remains historically low for Novembers, and is down 9.7 % from inventory levels one year ago).

NAR reported:

Sales up 5.6 % month-over-month, up 3.8 % year-over-year.

Prices up 5.8 % year-over-year

The market expected annualized sales volumes of 5.430 M to 5.700 M (consensus 5.520 million) vs the 5.81 million reported.

The graph below presents unadjusted home sales volumes.

Here are the headline words from the NAR analysts:

Lawrence Yun, NAR chief economist, says home sales in most of the country expanded at a tremendous clip in November. “Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” he said. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. 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.”

“The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” said Yun. “Price appreciation is too fast in a lot of markets right now. The increase in homebuilder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”

“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,” said Yun. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.”