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Sales of new and existing homes unexpectedly spiked to their highest levels in years last month.
America’s housing market appears poised to go out like a lion this year, as a pair of real estate reports this week showed home sales climbed to their highest level in a decade.
Sales of new houses clocked in at a seasonally adjusted annual rate of 733,000, according to a Friday report from the Census Bureau. That’s up 17.5 percent on the month and 26.6 percent on the year, representing the market’s strongest performance since 2007.
The West Coast led November’s gains with a 31.1 percent jump over the month. Sales in the Northeast, meanwhile, were up just 9.5 percent from October but spiked 53.3 percent on the year. Across the board, new home sales in November blew the prior months and years out of the water.
“These are the exact kinds of new home sales numbers the market has been desperate for the past few years,” Aaron Terrazas, a senior economist at real estate hub Zillow, said in a statement Friday.
The surprisingly strong report trails an equally robust performance from America’s existing homes sector – which is comparatively the much larger real estate segment of the two. Existing home sales jumped 5.6 percent last month, registering a seasonally adjusted annual rate of more than 5.8 million, according to a report published Wednesday by the National Association of Realtors. That’s the strongest showing the U.S. has seen from its existing home base since late 2006.
“Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” Lawrence Yun, the association’s chief economist, said in a statement accompanying the report. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year.”
Despite November’s strong performance on the home sales front, economists suggest it could have been a lot better. An extremely tight supply of available homes for sale has pushed prices up considerably and forced Americans to act quickly to lock down the homes of their choice. The National Association of Realtors estimates 44 percent of homes sold last month were on the market for less than a month.
Young first-time buyers, in particular, haven’t enjoyed much success in the housing market of late, due in part to prices and in part to limited numbers of starter homes available for sale. Heading into next year, it’s expected the housing market’s performance will hinge on builders’ ability to pick up the pace to keep up with what appears to be strong demand.
“But while the year seems to be ending on a high note, there’s no question 2017 could have been a lot better and that more needs to be done by builders to address the ongoing inventory crunch the market has been enduring for the past several years,” Terrazas said. “As we look ahead at 2018, it will be fascinating to see the extent to which tax reform … impacts builder behavior. Whether they use their tax savings to expand production, build at lower price points and/or hire more workers will go a long way in determining how the housing market shakes out next year and beyond.” Andrew Soergel