Existing-home sales, including sales of single-family homes, townhouses, condominiums and co-ops, were at an adjusted annual rate of 5.46 million in December – an increase of 14.7% compared with 4.76 million in November, according to the National Association of Realtors (NAR).
The sudden increase, however, might be a bit of an anomaly, as it is partly due to delays in application processing in November resulting from implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rules that took effect on Oct. 3.
The increase is likely also partly due to the fact that mortgage rates ticked down slightly at the end of the year.
The last-minute jump not only resulted in the largest monthly increase ever recorded, but it also boosted existing-home sales to 7.7% above what they were in 2014.
What’s more, 2015 was the best year for existing-home sales since 2006.
“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” says Lawrence Yun, chief economist for NAR, in a release. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”
The median existing-home price for all housing types in December was $224,100, an increase of 7.6% compared with December 2014, when the median price was $208,200. It was the 46th consecutive month that the median home price increased on a year-over-year basis.
Total housing inventory, however, continued to shrink in December – dropping 12.3% month-over-month to 1.79 million existing homes available for sale. That’s a 3.9-month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005. What’s more, it’s 3.8% lower compared with December 2014, when there were 1.86 million homes for sale.
“Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s seven percent increase in sales,” adds Yun. “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.”
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