NAR: Existing-Home Sales In 2016 Reached Highest Rate In A Decade

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While the Realtors group is forecasting existing home sales increasing 1.0 percent this year to 5.52 million units, it expressed concerns over President Donald Trump's suspension last Saturday of a plan by the Obama administration to cut mortgage insurance premiums on federally insured home loans. It was the highest figure since 2006, when 6.48 million total existing homes were sold, the NAR said.

But, there are problems still.

As of the end of December, existing-home sales were at an annual rate of 5.45 million, thus surpassing the 5.25 million recorded in 2015, NAR says.

From December 2015 to 2016, there was a four percent increase. "This monthly drop cancelled out any momentum sales had picked up - making the annual gain just shy of 1%".

"December's disappointing numbers may be low in large part because people bought in November instead of December in order to lock in low mortgage rates", realtor.com senior economist Joseph Kirchner said.

"We have this combination of higher home prices, higher interest rates and less inventory...a lot less inventory", Fettke said.

"While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end", Yun added.

The U.S. median - or middle - sale price for an existing home was $232,200 in December, up 4 percent from a year before.

Last month, sales of previously owned homes fell 6.2 percent in the Northeast and declined 4.8 percent in the West.

NAR Chief Economist Lawrence Yun said steady job creation and low mortgage rates accounted for the robust sales figures for the year. The sharpest drop in sales was for single-family homes.

Americans retreated from purchasing homes in December, as the number of properties listed for sale sank to its lowest level since 1999.

Real Wealth Network CEO Kathe Fettke said housing affordability is a widespread issue. "Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels".

"More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production", he said. "And then perhaps, if the signals in the economy are very positive over the next five to six months, we might see an increase in that inventory". Sales fell 2.8 percent to 5.49 million, as compared with market projections for a pullback to 5.52 million.

Homebuilding is now running just above a 1.2 million-unit rate.

The time it took to sell a home in December averaged 66 days statewide, down from 74 days a year ago.

"Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first-time buyer", Yun said.

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