Another notable item for the week. The Mortgage Bankers Association said the number of applications for purchase mortgages last week was the highest since June which bodes well for the coming year.
January 27, 2017
Despite taking a dip in December, existing home sales still closed out 2016 as their best year since 2006. The National Association of Realtors (NAR) said that over the 12 months an estimated 5.45 million single-family houses, townhomes, condos, and cooperative apartments changed hands. This was 200,000 more units than sold in all of 2015 and the highest number of such transactions since 6.48 million homes sold in the last gasp of the housing boom.
Still, the housing market hit some tough sledding in December as both new and existing home sales suffered. Interest rates peaked at two-year highs and inventories reached a new low in NAR’s records that date back to 1998. Sales for the month were at a seasonally adjusted annual rate of 5.49 million units, down by 2.8% from November, and exceeding by a bare 0.7% the November 2015 rate.
The number of existing homes for sale ended the month at 1.65 million, an estimated 3.6-month supply at the current rate of sale and a decline of nearly 11% from listings in November. NAR has said in the past that a six-month inventory is a good balance between supply and demand.
New home sales followed a similar pattern–a good year overall, a pretty bad December. The Census Bureau said there were 563,000 newly constructed single-family homes sold in 2016 compared to 501,000 in 2015. But, for the month sales were down 10.4% from November. The seasonally adjusted annual rate was 536,000, well below even the lowest forecast and off by 0.4% from the previous December. At least the inventory was relatively healthy–at 5.8 months it was the biggest of the year.
The Federal Housing Finance Agency (FHFA) which reports on home prices based on mortgages sold to or guaranteed by Freddie or Fannie posted another aggressive report on home price gains. The agency says prices rose 6.1% from November 2015 to November 2016 and 0.5% on a monthly basis. This is the fourth month in a row that the year-over-year gain for that index has exceeded 6.0%.
But maybe, as economists have been predicting for months, the price juggernaut is slowing down. NAR reports prices one month in advance of the other major data sources and said this week there was only a 4.0% annual increase in December compared to 6.8% for the 12-month period ended in November. That is more than a slowdown; in statistical terms, it is more like slamming on the brakes.