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Friday, December 18, 2020

Lawler: Early Read on Existing Home Sales in November

by Calculated Risk on 12/18/2020 06:29:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 6.50 million in November, down 5.1% from October’s preliminary pace but up 22.2% from last November’s seasonally adjusted pace.

Local realtor reports, as well as reports from national inventory trackers, suggest that the YOY decline in the inventory of existing homes for sale was slightly greater in November than in October, though what that means for the NAR inventory estimate is unclear. As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months.

Finally, local realtor/MLS data suggest that the median existing single-family home sales price last month was up by about 15% from last November. While some of the surge in median sales prices may be related to the mix of home sales, there seems little doubt that record low mortgage rates, a drop in the number of existing SF homeowners listing their homes, a sizable pandemic-related in demand toward single-family homes (including a surge in second-home purchases) and away from multifamily rentals (especially in high-density cities), and historically “easy” mortgage lending conditions from the standpoint of allowable debt-to-income ratios have combined to produce a seldom-seen explosion in single-family home prices (especially in a low-inflation environment).

CR Note: The National Association of Realtors (NAR) is scheduled to release November existing home sales on Tuesday, December 22, 2020 at 10:00 AM ET. The consensus is for 6.70 million SAAR.