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Monday, December 22, 2014

Existing Home Sales Decline as Supply Tightens

Existing home sales declined 6.1% in November to a seasonally adjusted annual rate of 4.93 million. Sales of existing homes dropped to their lowest annual pace since May, but are 2.1% higher than November 2013. Exisitng home sales in October was downwardly revised to a seasonally adjusted annual rate 5.25 million.



The median existing-home price increased 5.0% year-over-year to $205,300 in November, marking the 33rd consecutive month of year-over-year price gains.

Total housing inventory fell 6.7% in November to 2.09 million homes available for sale, yet increased 2.0% from November 2013. There is currently a 5.1-month supply of total existing homes available for sale, unchanged from last month.

Existing home sales weakened in each of the four regions, posting month-over-month declines of 9.6% in the West, 8.9% in the Midwest, 4.2% in the Northeast and 3.2% in the South.

NAR Chief Economist Lawrence Yun noted: “Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” he said. “The stock market swings in October may have impacted some consumers’ psyche and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”

All-cash sales were 25% of transactions in November, two percentage points lower than in October and 7 percentage points lower than November 2013.

First-time home buyers represent 31% of all buyers, a one percentage point increase from last month.

This month, Fannie Mae and Freddie Mac unveiled terms for their 97% loan-to-value home loan programs. Fannie began purchasing these low-down-payment loans on Dec. 13 and Freddie will be eligible to start purchasing these loans on March 23, 2015. The fixed-rate loans will be limited to home purchases and no-cash-out refinances, and the borrower must use the home as a primary residence. Fannie Mae mortgagors may take cash out in limited circumstances when refinancing a Fannie mortgage, and Freddie will allow manual underwriting for low-down-payment loans under certain circumstances. Borrowers must participate in a homeownership counseling program, which Fannie and Freddie regulator Mel Watt said would lead to lower default rates.

Read the NAR report.

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