A dip in existing sales activity in December (2.8 percent) was not enough to keep 2016 from being the strongest year of sales (5.45 million) in exactly a decade.
During this morning’s press conference, Lawrence Yun, NAR chief economist, attributed the strong 2016 to the ongoing good health of the labor market and the exceptionally low mortgage rates that buyers saw most of the year.
The key word, of course, being “most.” It’s evident that some prospective buyers were caught off guard by the surge in rates since November. It’s why – along with the continuous rise in home prices – sales were held back last month. First-time buyers, the most sensitive to rising rates, made up only 32 percent of the market.
With 2017 underway, how will buyers navigate higher prices and mortgage rates? More new and existing inventory would help immensely. Unfortunately, there doesn’t appear to be any relief soon. Total housing inventory has declined year-over-year for 19 straight months and is at its lowest level since NAR began tracking it in 1999.
For home sales to meaningfully improve, there simply needs to be more supply. Let’s hope it soon comes to fruition.