Existing Home Sales Remained Strong in November Amid Tight Supply
Sales of existing homes increased 1.9 percent in November, to a 6.46 million seasonally adjusted annual rate. Sales are still down 2.0 percent from a year ago. Sales in the market for existing single-family homes, which account for about 89 percent of total existing-home sales, rose 1.6 percent in November, coming in at a 5.75 million seasonally adjusted annual rate (see first chart). From a year ago, sales are down 2.2 percent. Condo and co-op sales increased 4.4 percent for the month, leaving sales at a 710,000 annual rate for the month versus 680,000 in October (see first chart). From a year ago, condo and co-op sales are roughly unchanged.
The dominant single-family segment saw sales rise in two regions of the country and come in unchanged in the other two. Sales rose 2.6 percent in the West and posted a gain of 2.4 percent in the South, the largest region by volume. Sales were unchanged in the Northeast, the smallest region by volume, and in the West. Sales are still down in three of the four regions measured from a year ago (-13.7 percent in the Northeast, -0.7 percent in the Midwest, and -4.1 percent in the West, but up 1.2 percent in the South).
Total inventory of existing homes for sale fell in November, declining 9.8 percent to 1.11 million, leaving the months’ supply (inventory times 12 divided by the annual selling rate) down 0.2 months at 2.1; months’ supply was as low as 1.9 at the beginning of the year and as high as 2.6 in July and August.
For the single-family segment, inventory was down 10.3 percent for the month at 960,000 and is 11.1 percent below the November 2020 level. The months’ supply was 2.0, down from 2.3 in the prior month (see bottom of first chart).
The condo and co-op inventory fell 5.5 percent to 154,000, pushing the months’ supply down to 2.6 from 2.9 in October. Months’ supply is 23.5 percent below November 2020 (see bottom of first chart).
The median sale price in November of an existing home was $353,900, 13.9 percent above the year ago price. For single-family existing home sales in November, the price was $362,600, a 14.9 percent rise over the past year (see second and third charts).
The median price for a condo/co-op was $283,200, 4.4 percent above November 2020 (see second and third charts). Price gains have slowed significantly for condos while prices for single-family homes continue to rise at a robust pace (see third chart again).
Persistent faster price gains for the single-family segment have resulted in a significant gap developing over the past decade. While median prices were about equal between 2004 and 2014, since 2014, faster price gains for the single-family segment have pushed the median price for existing single-family homes about 25 percent above the median condo price (see second chart again).
Housing is likely to be volatile over the coming months as fundamentals adjust to changing market conditions. New waves of Covid and more opportunities for employees to work from home are likely to impact demand while supply chain issues and labor difficulties impact supply.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
