The headline of this post may lead you to believe that existing-home sales were up again in November for the third straight month. That is indeed true.
However, “the streak” I’m referring to is the remarkable fact that existing-sales prices have astonishingly risen year-over-year now for 57 months. That’s nearly five straight years.
While the gradual sales recovery since the Great Recession has certainly played a role in the multi-year run up in prices, the rate itself has without question been quickened by the dearth of new and existing supply in many parts of the country. This was evident once again in November’s sales data, which saw price growth far above incomes in the Midwest (6.5 percent), South (9.2 percent) and West (8.5 percent).
As Lawrence Yun, NAR chief economist, points out, it’s not just the price of homes to purchase that are rapidly increasing. So are rents. As a result, it’s becoming even more difficult for first-time buyers – who made up only 32 percent of sales last month – to save and afford to buy their first home. And that was before the recent run-up in mortgage rates, which are expected to rise to around 4.50 percent through next year.
Despite the challenges many prospective buyers continue to face, 2016 will still go down as the best year of existing sales since 2006. What will 2017 bring? We’ll find out soon.