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Existing Home Sales Flattened by Low Supply Levels & Tight Credit

for-saleHomebuyers are being stopped in their tracks by tightening credit standards and the low amount of homes for sale on the market.

Existing home sales in November 2015 are expected to come up pretty flat compared to the previous month.

According to Auction.com's Residential Real Estate Nowcast, existing home sales are projected to come in between 5.16 and 5.54 million annual sales, with a targeted number of 5.36 million. This number is nearly the same as October, but still up 8.4 percent from last year.

“People looking to buy a home today face dual constraints—extraordinarily low inventory and extremely tight credit,” said Rick Sharga, Auction.com EVP. "But demand may be weakening as well, since the number of first-time homebuyers continues to be lower than normal, and purchases by investors—especially investors from China and Europe—appear to be slowing down a little bit as well. It will be interesting to see what happens to demand if the Fed raises rates in December and lenders respond by hiking mortgage interest rates."

nowAuction.com's predicted in October that existing home sales would fall between 5.26 and 5.51 million units, while the National Association of Realtors (NAR) reported earlier this month that October's sales fell 3.4 percent to 5.36 million units.

Auction.com Chief Economist Peter Muoio says that the halt in exiting home sales is no shock to the industry, as it aligns with a "soft spot in the economy, some downshifting in job growth, and the financial market turbulence experienced in late summer."

“The renewed strength of the labor market, including accelerating wage gains, should be good news for the housing market heading into 2016,” Muoio explained. “We continue to look for higher home prices to coax more sellers into the market. Along with wages, this could be an important new ingredient to the 2016 housing story.”

On the up side of things, existing home prices continue to soar higher and are creeping up on the pre-bust all-time high of $229,875 recorded in July 2011. Auction.com suspects that exiting home prices will continue on their upward pattern in November, reaching $225,323, an increase of 8.7 percent year-over-year.

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