Data in the Re/Max National Housing Report show that U.S. home sales slipped significantly in November. A survey of 52 metro regions showed that sales slipped nearly 16% for the month and 7.8% when compared to November 2012. Experts say a downturn is expected during this time of year due to weather and the holidays, but that this rate of decline hasn’t been seen since 28 months. Analysts are convinced that the increased rate of decline is being driven by lower inventory, rising interest rates and a market that is coming more into balance as the housing recovery continues. For more on this continue reading the following article from TheStreet.
The housing market experienced some sand in its gears in November, with home sales falling by 15.9%.
That figure comes from the month's Re/Max National Housing Report, a survey of MLS data in 52 metro regions. In addition to the 15.9% decrease in sales, Re/Max reports a 7.8% decrease in November home sales on a year-to-year basis -- the first such decline in 28 months.
"In a month when we normally expect home sales to slow down, this November we've seen more than seasonality at play," says Margaret Kelly, CEO of Re/Max. "While the fundamentals for a housing recovery remain in place, the market never moves in a straight line. Along the way, we should expect some fluctuations resulting from a number of different factors."
A tightening supply of homes for sale, "seasonal factors" (home sales typically aren't strong toward the end of the year), rising interest rates, lousy weather in November for much of the nation and the hangover from the government shutdown all contributed.
Still, at $187,000, the median home prices are up 13.7% from November 2012.
Also, the home sales market is "in balance," according to Re/Max. In other words, it would take 5.4 months, on average, to sell the entire inventory of "for sale" homes in the U.S., closing in on the six-months level market experts say is ideal between buyers and sellers.
Add it all up and it's a continuing roller-coaster ride for the residential real estate market.
Low inventory seems to be having the most impact on home prices and home values heading into 2014.
Kelly says home prices are heading north due to a combination of "low inventory and high demand" -- 43 of 52 metro areas reported higher home values in November on a year-to-year basis. Of the 43 regions, 16 reported double-digit gains.
Home prices likely won't rise at the trajectory were seeing right now for the long term, and the number of homes for sales will surely rise as 2014 opens, especially after March 1 -- the unofficial opening of the spring selling season. That should lift inventory and give buyers more options, which would likely cut into rising home prices.
But those are the fundamentals of a healthy housing market, and that's what we should see coming out of a volatile year for the nation's housing market.
This article was republished with permission from TheStreet.