Existing homes sales fell to 2014 levels in November

Sales of previously owned homes in November fell to the lowest level in 19 months as a combination of factors hampered growth.

Existing-home sales — which are completed transactions that include single-family homes and condos — fell 10.5 percent to a seasonally adjusted annual rate of 4.76 million in November, the lowest level since April 2014, the National Association of Realtors said Tuesday. 

{mosads}Sales fell from 5.32 million in October, representing the largest monthly drop since a 22.5 percent decline in July 2010.

And sales are 3.8 percent below a year ago — the first year-over-year decrease since September 2014. 

The main reason for the drop is probably the industry’s adjustment to the new Know Before You Owe rule, which is aimed at better educating buyers but is slowing down some closings and pushing them into December.

Still the sales slowdown is likely an anomaly in the expanding housing sector.

“As long as closing timeframes don’t rise even further, it’s likely more sales will register to this month’s total, and November’s large dip will be more of an outlier,” said Lawrence Yun, NAR chief economist.

Low inventory and affordability issues also are weighing on the sales.

“However, signed contracts have remained mostly steady in recent months, and properties sold faster in November,” Yun said.

“Therefore it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.”

In November, 47 percent of respondents to an NAR poll reported that they are experiencing a longer time to close compared with a year ago, up from 37 percent in October.

“Realtors worked hard to prepare for Know Before You Owe, and we knew there would be some near-term challenges as the industry continues to adapt,” says NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Fla.

“Nonetheless, an early trend of longer lead times to closings is cause for concern,” Salomone said. 

Meanwhile, total housing inventory at the end of November decreased 3.3 percent to 2.04 million existing homes available for sale, and is now 1.9 percent lower than a year ago.

Unsold inventory is at a 5.1-month supply at the current sales pace, up from 4.8 months in October.

The median existing-home price for all housing types in November was $220,300, which is 6.3 percent above November 2014.

Interest rates on mortgages rose to 3.94 percent last month, holding below 4 percent for the fourth straight month.

Yun said that the Federal Reserve’s decision this month to raise short-term interest rates are expected to push borrowing costs to around 4.5 percent by the end of next year.

Distressed sales —  foreclosures and short sales — climbed to 9 percent in November, up from 6 percent in October but unchanged from a year ago.

The percent share of first-time buyers fell to 30 percent in November, down from 31 percent in October.

Single-family home sales dropped 12.1 percent to a seasonally adjusted annual rate of 4.15 million in November while condominium sales increased 1.7 percent to a seasonally adjusted annual rate of 610,000 units in November.

All four regions experienced drops in sales. 

November’s existing-home sales in the Northeast declined 9.2 percent, sales in the Midwest fell 15.4 percent, the South saw a 6.2 percent drop and sales in the West decreased 13.9 percent.