The continued inventory shortage is causing troubles for buyers, but 2017 still ended up being the best year for existing-home sales in 11 years, according to the National Association of Realtors.
Existing-home sales dropped 3.6% month over month on a seasonally adjusted basis in December as inventory woes continued. But even with that decline, sales for all of 2017 were up 1.1% over the prior year, hitting a sales pace of 5.51 million – the highest since 2006.
However, continued inventory and affordability issues kept sales from going even higher, according to Lawrence Yun, NAR’s chief economist.
“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” Yun said. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace. … Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”
The median existing-home price in the US last month was $246,800, a 5.8% spike from December 2016. December of 2017 also marked the 70th consecutive month of year-over-year price gains.
Inventory, meanwhile, was tighter than ever. Total US inventory at the end of December was 1.48 million existing homes available for sale – an 11.4% drop from the year before. Unsold inventory is at a 3.2-month supply at the current sales pace – the lowest level since NAR began tracking nearly two decades ago.
“The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home-price gains – at 5.8% nationally in 2017 – doubled the pace of income growth and were even swifter in several markets,” Yun said.