December 2014 Existing Home Sales

Sales of existing homes increased 2.4 percent in December according to the National Association of Realtors.  The uptick follows November’s downwardly revised decline of 6.3 percent (originally 6.1 percent).  On an annualized basis, the sales rate increased to 5.04 million from 4.92 million a month earlier.  Sales of single-family homes increased by 3.5 percent, and condos fell 5.0 percent.  For all of 2014, there were 4.93 million homes sold, 3.1 percent less than 2013’s count.

Inventory is tight after the strong month of sales.  Around the nation, there are only 1.85 million homes on the market, down from 2.08 million in November.  At the current rate of sales, the entire stock of homes would be gone in just 4.4 months.

Prices firmed in the period.  The average price of a home improved $2,100.00 to $255,800 and is 4.4 percent higher than a year earlier.  The median price ticked higher to $209,500 from $207,200 in November and has increased by 6.0 percent since December 2013.  Interest rates helped make homes more affordable.  According to Freddie Mac, the average commitment rate for a 30-year conventional, fixed-rate mortgage in December fell to 3.86 percent, its lowest level since May 2013.

One possible fly in the ointment came from a separate National Association of Realtors survey mentioned in the release.  The annual share of first-time home buyers fell to its lowest level in nearly three decades.  These new buyers are an important segment of the marketplace because they allow current homeowners to trade up.  Fewer first-time buyers might provide clues into developing secular trends for home sales.  Perhaps younger purchasers may be having a tougher time qualifying for loans.  Equally plausible is a changing mindset where they don’t feel as compelled to own a home as did previous generations.  Atlas is not convinced the shadow of crisis has passed.         (by C. Cox)