The median U.S. home price continued to rise in November, but existing-home sales fell 4.3% due to rising interest rates, tight inventory, and tough mortgage lending standards.
It was the first time in more than two years that sales were below year-ago levels, data from the NATIONAL ASSOCIATION OF REALTORS® shows.
NAR Chief Economist Lawrence Yun said something has to give. “There’s a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction,” he said.
Meanwhile annual home prices are rising at the highest rate in eight years. The U.S. median price for existing homes reached $196,300 in November, up 9.4% from November 2012.
Home prices rose in part because fewer distressed homes — foreclosures and short sales — were in the sales mix. Only 14% of November sales were distressed, down from 22% in November 2012. Foreclosures sold for an average discount of 17% below market value in November, while short sales were discounted 13%.
Homes Selling Faster Than a Year Ago
There were 2.09 million U.S. homes for sale at the end of November. At the current sales pace, it would take 5.1 months to sell them all. That’s about the same as October’s 4.9-month supply and last November’s 4.8-month supply.
But homes are selling at a much faster pace this year than they did last year. The median time on market in November was 56 days, down from 70 days in November 2012. Short sales were on the market for a median of 120 days, while foreclosures typically sold in 59 days, and non-distressed homes took 55 days. Thirty-five percent of the homes sold in November were on the market for less than a month.
Looking ahead, the housing market will have to adjust in January to new federal mortgage lending rules. Those rules prohibit loan features like interest-only payments and force lenders to consider a consumer’s ability to repay before making a mortgage, said NAR President Steve Brown.
“This means that qualified borrowers are getting a loan that they are very likely to be able to repay, but some borrowers may wind up paying much more for their mortgage, or not get a loan at all due to the tougher standards,” Brown said. “The new rules may tighten credit too much, but we’re hopeful regulators will make adjustments if this proves to be true.”
Related: How to Make Sure Your Lender is Treating You Right
Who’s Buying Homes?
The NAR data also track who’s buying homes:
- 28% of purchasers were first-time homebuyers.
- 32% of buyers paid cash.
- 19% of sales were to individual investors.
The median price for all home types rose in November. The median single-family home price was $196,200 in November, up 9.4% above a year ago.
Condominium and co-op sales dropped 7.9%, but the median existing-condo price of $197,400 in November was up 10% from November 2012.
November 2013 regional results:
with Nov. 2012
|Northeast||Down 3.0%||$242,900||Up 5.7%|
|Midwest||Down 4.1%||$151,100||Up 6.7%|
|South||Down 2.4%||$168,700||Up 7.7%|
|West||Down 8.5%||$284,400||Up 16.5%|