Despite inventory pressure, which in turn has driven continued price appreciation as a result of buyer demand, the National Association of Realtors announced This Week in Real Estate that 2017 existing home sales recorded the best year in 11 years. Below are a few highlights from the fourth week of January that influence our business:
* Cash Sales Tie Post-Recession High.NAHB analysis of the most recent Quarterly Sales by Price and Financing published by the Census Bureau reveals that cash sales accounted for 11,000 new home sales in the fourth quarter of 2017. Cash purchases made up 7.9% of purchases in the fourth quarter, a mark not seen since 2014. Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales. Roughly 20% of existing home transactions were all-cash sales in December 2017, according to estimates from the National Association of Realtors. Conventional financing contracted sharply following the Great Recession, but has expanded as the recovery has continued. In 2006, conventional financing accounted for 90% of new home purchases, falling to 59% in 2010. Conventional loans accounted for 72% of new home sales in 2017, on average, the highest annual average since 2008.
* Best Year For Home Sales Since 2006, Despite Headwinds.Existing home sales in 2017 increased 1.1 percent for the best year in 11 years. According to the National Association of Realtors® (NAR), the 5.51 million sales of existing single-family homes, townhomes, condos, and cooperative apartments surpassed the 5.45 million sales in 2016 to have the highest number of transactions since 6.48 million were sold in 2006. Lawrence Yun, NAR chief economist, says the housing market performed remarkably wellfor the U.S. economy in 2017, but wasn’t as good as it might have been. The year brought substantial wealth gains for homeowners and historically low distressed property sales. “Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” he said. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, andbuying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a strongersales pace.” The medianexisting-home pricefor all housing types in December was $246,800, a 5.8 percent rate of appreciation for the year and was the 70th straight month of year-over-year gains. The inventory of available homes fell another 11.4 percent in December to 1.48 million and is now 10.3 percent lower than a year ago (1.65 million). The inventory has declined year-over-year for 31 consecutive months and is currently estimated at a 3.2-month supply, the lowest level since NAR began tracking in 1999. Existing-home sales in the West declined 0.8 percent below a year ago.
* Purchase Mortgage Applications Hit 8-Year High.Mortgage applications continue on the tear they started during the first week of 2018. The Mortgage Bankers Association’s (MBA’s) Market Composite Index, a measure of loan application volume, increased 4.5 percent on a seasonally adjusted basis during the week ended January 19. The gain came on the heels of 8.3 percent and 4.1 percent increases in the first two weeks of the year. Both the Refinancing and Purchase Indexes saw gains. The seasonally adjustedPurchase Index was up 6 percent from the week ended January 12, its fourth straight increase, and was the highest since April 2010.