The headlines for existing home sales say “existing-home sales dropped off considerably in November to the slowest pace in 19 months, but some of the decrease was likely because of an apparent rise in closing timeframes that may have pushed some transactions into December“. Our analysis of the unadjusted data shows that home sales declined.
Econintersect Analysis:
- Unadjusted sales rate of growth decelerated 0.2 % month-over-month,unchanged 0.0 % year-over-year – sales growth rate trend declined using the 3 month moving average.
- Unadjusted price rate of growth decelerated 0.5 % month-over-month, up 4.0 % year-over-year – price growth rate trend is modestly improved using the 3 month moving average.
- The homes for sale inventory declined again this month, remains historically low for Novembers, and is down 1.9 % from inventory levels one year ago).
NAR reported:
- Sales down 10.5 % month-over-month, down 3.8 % year-over-year.
- Prices up 6.3 % year-over-year
- The market expected annualized sales volumes of 5.100 to 5.500 million (consensus 5.32 million) vs the 4.76 million reported.
Unadjusted Year-over-Year Change in Existing Home Sales Volumes (blue line) – 3 Month Rolling Average (red line)
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The graph below presents unadjusted home sales volumes.
Unadjusted Monthly Home Sales Volumes
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Here are the headline words from the NAR analysts:
Lawrence Yun, NAR chief economist, says multiple factors led to November’s sales decline, but the primary reason could be an anomaly as the industry adjusts to the new Know Before You Owe rule. “Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” he said. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.”
According to Yun, although Realtors® are adjusting accordingly to the Know Before You Owe initiative, the main takeaway so far has been the need for longer closing times. According to NAR’s Realtors® Confidence Index, 47 percent of respondents in November reported that they are experiencing a longer time to close compared to a year ago, up from 37 percent in October.
“It’s possible the longer timeframes pushed a latter portion of would-be November transactions into December,” says Yun. “As long as closing timeframes don’t rise even further, it’s likely more sales will register to this month’s total, and November’s large dip will be more of an outlier.”
“Realtors® worked hard to prepare for Know Before You Owe, and we knew there would be some near-term challenges as the industry continues to adapt,” says NAR President Tom Salomone. “Nonetheless, an early trend of longer lead times to closings is cause for concern. As Realtors® report issues with their transactions, we will continue to work with the Consumer Financial Protection Bureau to ensure as little disruption as possible to the business of real estate.”
