KEY MARKET INDICATORS as of Nov 28, 2017
October Home Sales
Existing home sales increased 2% m/m to a seasonally adjusted annual rate of 5.48 million units in October, close to the trend level for the first 10 months. Compared to 12 months ago, existing home sales were up 2.9% in October. The inventory level continued to fall this month, decreasing 3.2% to 1.8 million units. The implied supply at current pace of sales fell to 3.9 months – far below the 6 months of supply that is regarded as normal. Homes were sold quickly after listing. Typical homes stayed on the market for just 34 days in October, vs. 41 days a year ago. For real estate agents and loan officers, this means that while homebuyers may need more time finding the right home, once they have found the right one, they will act fast to close the sale. The tight housing market condition continued to drive home prices higher, with the median home price up 5.5% from a year ago to $247,000. Rising home prices means that the average loan balance, and the conforming loan limit will increase next year. The Federal Housing Finance Agency announced that the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2018 will be $453,100, an increase from $424,100.
New home sales increased 6.2% m/m to a seasonally adjusted annual rate of 684,000 units in October. Compared to 12 months ago, new home sales were up 19.6% in October. For the year-to-date, new home sales reported an increase of 8.7% (or close to 41,000 units) from a year ago, which is slightly below our expectation of 10% year over year growth. New home sales in the West, South, and Midwest regions were up in the mid-teens year-over-year in October, but were up 67% in the Northeast.
The imbalance in the housing market today between demand and supply is concentrated at the lower-price segment, where demand is strong but supply has seen relatively little growth. Sales of new homes priced below $300,000 grew by just 14% between 2014 and 2016, while demand from first-time homebuyers has grown by 36% during the same period. New home sales in the under-$300,000 price range are up by less than 3% (or 6,000 units) so far this year, so pressure on home prices and housing affordability will likely continue.