The big storylines of the 2016 housing market have been short supply and declining affordability, particularly toward the end of the year as mortgage interest rates have risen.
Despite these issues, existing-home sales are expected to close 2016 [1] with their best year since 2006, with an annual pace of 5.42 million—a 3.3 percent increase from 2015 and the highest rate since they sold at a 6.47 million annual clip a decade ago, according to the National Association of Realtors (NAR).
Existing-home sales reported an annual pace of 5.60 million [2] in October, the NAR’s most recent data—nearly 6 percent higher than in October 2015. NAR will the existing-home sales report covering November on Wednesday, December 21.
“October's strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” NAR Chief Economist Lawrence Yun said. “Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes.”
NAR recently reported a decline in buyer enthusiasm, however, amid an environment of rising mortgage rates and the possibility of more rate hikes by the Fed next year. Existing-home sales are expected to expand by just 2 percent in 2017, to an annual pace of 5.52 million.
“Although the economy is expected to continue to expand with around 2 million net new job creations, existing home sales are expected to see little expansion next year because of affordability tensions from rising mortgage rates and prices continuing to outpace income growth,” said Yun.
HUD/Census Bureau New Residential Sales for November 2016, Friday, December 23
New residential home sales were up by 18 percent over-the-year in October [3], selling at an annual pace of 563,000—accounting for approximately 11 percent of all residential home sales during the month, according to the joint report from HUD and the Census Bureau.
The industry will find out how new home sales performed in November 2016 when HUD and Census Bureau release their latest data on Friday, December 23.
Ralph McLaughlin, Trulia [4]’s chief economist, said that beyond the month-over-month totals of the October HUD/Census report, a less volatile number to look at is the 12-month rolling total, which is up 13 percent, year-over-year, and represents the best one-year span since August 2008.
“The 12-month rolling total of new homes sales was the best in over eight years and boosts sales to 85 percent of the 50-year norm,” McLaughlin said. “New homes are helping satisfy homebuyers constrained by low resale inventory, but sales have room to grow.”
This Week’s Schedule
Wednesday, December 21
National Association of Realtors, Existing-Home Sales for November 2016, 10 a.m. EST
Thursday, December 22
FHFA House Price Index for October 2016, 9 a.m. EST
Friday, December 23
HUD/Census Bureau New Residential Sales for November 2016, 10 a.m. EST
University of Michigan Consumer Sentiment for December 2016, 10 a.m. EST