Despite a weak December ending a trend of two straight months of increases, there were still more existing homes sold last year than in any year since 2006.
The most recent data from the National Association of Realtors shows that existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.1% in 2017 to a 5.51 million sales pace.
That bests 2016’s total of 5.45 million and becomes the highest that figure has been since 2006, when there were 6.48 million existing homes sold.
This increase is in spite of December being an underwhelming month for existing home sales.
According to the NAR report, existing home sales fell in December by 3.6% to a seasonally adjusted annual rate of 5.57 million from a downwardly revised 5.78 million in November.
Lawrence Yun, NAR’s chief economist, said that the housing market performed “remarkably well” 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,” Yun said. “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.”
According to the NAR report, the median existing-home price for all housing types in December was $246,800, up 5.8% from December 2016’s total of $233,300. That marks marks the 70th straight month of year-over-year price gains.
“Existing home sales posted a weak December, ending 2017 on a disappointing note after appearing to have picked up momentum in October and November. They ended the year very close to where they began it,” Zillow Senior Economist Aaron Terrazas said.
“Sales faced significant headwinds in December – both structural and seasonal. Three years of contracting inventory was bound to catch up with transactions sooner or later and for much of 2017 inventory was clearly weighing on sales,” Terrazas added.
“Home shoppers and sellers also had to contend with a longer than normal holiday season and rising prices. Condo sales fell particularly sharply in December, which was to be expected given their exceptionally strong surge in November. Existing home inventory is unlikely to ease in the months ahead, making new home construction all the more critical to meet the housing needs of millennials who are finally confident enough in the economy to buy houses and start families,” Terrazas concluded.
As Terrazas noted, inventory is still a concern.
According to NAR’s report, total housing inventory at the end of December fell 11.4% to 1.48 million existing homes available for sale, and is now 10.3% below one year ago.
Housing inventory has now fallen year-over-year for 31 consecutive months. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago to the lowest level since NAR began tracking that data in 1999.
“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% nationally in 2017 – doubled the pace of income growth and were even swifter in several markets,” Yun said.