Existing-home sales moved higher for the third straight month in November and reached their strongest pace in nearly 11 years, while new construction of single family homes surged to a 10-year high, according to two new reports.
Figures released Wednesday by the National Association of Realtors revealed that existing home sales surged 5.6% to a seasonally-adjusted annual rate of 5.81 million units last month amid continued recovery in areas in the South ravaged by Hurricanes Harvey and Irma.
After last month's increase, sales are 3.8% higher than a year ago and are at their strongest pace since December 2006.
Economists had forecast home sales rising 0.9% to a 5.52-million-unit rate in November from a previously reported 5.48-million-unit pace in October. The median home sales price increased 5.8 percent from a year ago to $248,000 in November.
And more buyers paid in cash in November, a trend that NAR said "continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing".
Total housing inventory fell 7.2 percent points month-over-month to 1.67 million homes for sale, while year-over-year inventory dropped 9.7 percentage points, the 30th consecutive month of year-over-year declines.
"The near-record number of home sales in November continues to show that buyer enthusiasm remains strong even in the face of ongoing price growth", said Duncan MacKenzie, CEO of the association. The rate of 6 to 6.5 months is considered to be a balanced market. "Through November, total statewide dollar volume across all residential property types is sitting at about 105 billion dollars, compared to about 96 billion dollars at this time previous year". The median home price was $220,200 in the region.
The overall impact from the tax reform plan "could be mildly negative", however that could be cushioned by good market conditions that include short-term fiscal stimulus from the legislation, he said. New home sales are expected to drop by 1.4%.
After Dec. 31, 2025, the cap would revert to $1 million in loan value. In October the national median price was $247,000. "That is, national house prices will be approximately 4 percent lower than they would have been if there was no tax legislation". Prices for U.S. Treasuries fell.
Permits for the future construction of these housing units rose 1.4 percent to a level not seen since August 2007.
Realtors estimate that the housing starts and completions rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.