Dive Brief:
- Existing home sales bounced back 14.7% in December — after a 10.5% November plunge — to a seasonally adjusted rate of 5.46 million, the National Association of Realtors reported. Sales for 2015 hit 5.26 million, the highest annual level since 2006.
- Inventories of existing homes for sale fell 12% to 1.79 million in December. Inventories, barely four months'-worth, are at the lowest level in nearly 10 years, and new-home construction hasn’t been keeping up with demand, resulting in tight supplies and rising prices, The Wall Street Journal reported.
- December’s national median home rose to $224,100, up 7.6% from December 2014, marking the 46th consecutive month of year-over-year price gains.
Dive Insight:
The sales drop in November, according to the NAR, was largely due to new, delay-causing rules enacted by the Consumer Financial Protection Bureau in October. Because December wound up having such a strong month, it seems those delays did not result in a marked increase in cancellations, according to The Journal.
The lack of new-home construction is causing pressure on the existing home sales market, but, according to The Journal, it is not likely to break through pre-recession levels due to a shortage of skilled laborers, tight lending markets and more conservative builders who are hesitant to jump in after getting dinged by the housing bust.
Lawrence Yun, NAR's chief economist, only forecasts a 1% increase in existing home sales for 2016 and said in a release, "In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas."
In the midst of increasing demand, however, December housing starts for single-family homes and apartments fell 2.5% from November — a decline that came as a surprise to many economists.
