Last week's key indicators confirmed that 2017 was a great year for home sales. It's the most number of sales in eleven years.
Both existing and new home sales had a rough December, but each had an excellent year. It was, in fact, the best year for existing home sales in 11 years, and we suspect new home sales could make a similar claim.
There were an estimated 5.51 million existing homes sold during the year, bumping the 5.45 million 2016 sales into third place. The National Association of Realtors (NAR) says there is still a ways to go to top the 6.5 million sold in 2006.
As for December, sales ended a three-month winning streak, falling 3.6%. They were 1.1% higher than in December 2016.
NAR chief economist Lawrence Yun said the market performed “remarkably well” in 2017, bringing homeowners substantial gains in wealth. “At the same time, market conditions were far from perfect,” he said. “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.”
NAR also said inventories dropped another 11.4%, from the already record low in November. There are now only 1.48 million homes for sale nationwide, an estimated 3.2-month supply. NAR considers a 6-month supply a “balanced” market. The inventory has shrunk on an annual basis for 31 straight months.
It was somewhat the same story for new home sales, a good year topped with a disappointing December. Sales fell 9.3% month-over-month to an annual rate of 625,000 units. This was still 14.1% higher than the rate in December 2016.
Sales for the entire year totaled an estimated 608,000. This was up 8.3% from the 561,000 sold in 2016.
The end of the refinancing boom has been predicted for several years. While it isn’t as robust as it was in previous years when those loans represented more than 65% of mortgage applications, it certainly hasn’t dried up, and lenders have worried about what would happen when it did. Loans for home purchase have perked along, but not at a rate that could come close to filling the gap when the refinancing boom did end. Now, with refinancing still surprisingly strong, home buyers finally appear to be stepping up to the plate.
The Mortgage Bankers Association (MBA) monitors mortgage applications each week and reports that those for home purchases have increased for each of the last four weeks. Last week they hit the highest level since April 2010.
All being said, a pretty good week for real estate.
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