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Tuesday, December 22, 2020

Comments on November Existing Home Sales

by Calculated Risk on 12/22/2020 12:22:00 PM

Earlier: NAR: Existing-Home Sales Decreased to 6.69 million in November

A few key points:

1) This was the highest sales rate for November since 2005. Some of the increase over the last several months was probably related to pent up demand from the shutdowns in March and April.  Other reasons include record low mortgage rates, a move away from multi-family rentals, strong second home buying (to escape the high-density cities) and favorable demographics.

The delay in the buying season has pushed the seasonally adjusted number to very high levels.  For example, this number of sales, Not Seasonally Adjusted (NSA) in August, would have given a 5 million Seasonally Adjusted Annual Rate (SAAR), as opposed to 6.7 million.   So the delay in the buying season is a factor in the headline number being so high.

There are going to be some difficult comparisons in the second half of next year!

2) Inventory is very low, and was down 22% year-over-year (YoY) in November. This is the lowest level of inventory for November since at least the early 1990s.  Months-of-supply is at a record low.  Inventory will be important to watch in 2021, see: Some thoughts on Housing Inventory

Existing Home Sales YoY Click on graph for larger image.

This graph shows existing home sales by month for 2019 and 2020.

Note that existing home sales picked up somewhat in the second half of 2019 as interest rates declined.

Even with weak sales in April, May, and June, sales to date are up about 4% compared to the same period in 2019.

Existing Home Sales NSAThe second graph shows existing home sales Not Seasonally Adjusted (NSA) by month (Red dashes are 2020), and the minimum and maximum for 2005 through 2019.

Sales NSA in November (492,000) were 22% above sales last year in November (404,000). This was the highest sales for November (NSA) since 2005.