Photo: Samantha Marx/Flickr
Despite rising US home prices and tight inventory in some markets, existing home sales reached their highest levels since the housing crisis began in 2006. Thanks to rising incomes, homebuyers could be realizing they can now afford to buy a home, according to a newly released report by the National Association of Realtors (NAR).
Existing home sales rose to 5.45 million in 2016, which was the highest level since the 6.48 million existing homes purchased in 2006. Meanwhile, December’s sales were 0.7 percent higher than the previous year.
While December’s tally was up year-over-year, it was down 2.8 percent from the previous month, according to the seasonally adjusted numbers in the NAR report.
The December “slowdown” is likely attributed to homebuyers rushing to complete sales in November, before historically low mortgage rates rose. Otherwise, many of November’s existing home buyers would likely have purchased in December, says NAR.
Year-over-year median existing home prices rose four percent to $232,200 in December — the 58th consecutive month of year-over-year gains. However, median prices were 0.9 percent lower in December than the previous month.
Single-family home prices rose nearly four percent year-over year to $233,500 in December. They were down one percent from the previous month. Meanwhile, condos and co-op prices were up 5.5 percent from 2015 to $221,600, but only 0.5 percent lower from November.
NAR’s chief economist Lawrence Yun pointed out that it’s not going to get any easier for first-time buyers this year. There is a shortage of homes for sale in many areas, rising rents and home prices, as well as rising mortgage rates.
“It’ll take more starter homes hitting the market, continued job gains, and even stronger wage growth for first-timers to make up a greater share of the market.”
Meanwhile, Realtor.com senior economist Joe Kirchner called 2016 a “tremendous year.”
“We are continuing the recovery [from the housing bust]. Incomes have been going up. Wages are starting to go up, and people are saying, ‘A-ha, now I can afford a home.’”
Click here to read the entire report.