November 2018 Residential Sales, Inventory and Prices

Click image for larger view

Sales of new single-family houses in November 2018 have not been reported because of the federal government’s ongoing partial shutdown. 

Click image for larger view

Existing home sales added to gains in November (+100,000 units), rising to a SAAR of 5.32 million units (5.190 million expected). Inventory of existing homes for sale shrank in both absolute (-110,000 units) and months-of-inventory (-0.4 month) terms. Because new-home sales have not been reported, the share of total sales comprised of new homes is incalculable. The median price of previously owned homes sold in November advanced to $255,700 (+$2,600 or 1.0% MoM). 

Click image for larger view

Housing affordability settled lower although the median price of existing homes for sale in October dropped by $1,400 (-0.5%; +4.3 YoY), to $257,900. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices slowed to a not-seasonally adjusted monthly change of +0.1% (+5.5% YoY).

“Home prices in most parts of the U.S. rose in October from September and from a year earlier,” said David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house. Fixed rate 30-year mortgages are currently 4.75%, up from 4% one year earlier. Home prices are up 54%, or 40% excluding inflation, since they bottomed in 2012. Reduced affordability is slowing sales of both new and existing single family homes. Sales peaked in November 2017 and have drifted down since then.

“The largest gains were seen in Las Vegas where home prices rose 12.8% in the last 12 months, compared to an average of 5.3% across the other 19 cities. This is a marked change from the housing collapse in 2006-12 when Las Vegas was the hardest hit city with prices down 62%. After the last recession, Las Vegas diversified its economy by adding a medical school, becoming a regional center for health care, and attracting high technology employers. Employment is increasing 3% annually, twice as fast as the national rate.” 

Click image for larger view

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.