Stock Market Wealth Effect Kicks In
Lawrence Yun, NAR chief economist, provides this explanation. “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."
“As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”
- The median existing-home price for all housing types in November was $248,000, up 5.8 percent from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains.
- Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.
- First-time buyers were 29 percent of sales in November, which is down from 32 percent both in October and a year ago.
Regional Single-Family Sales by Price
Supply in Months
- Supply in months is calculated as Seasonally adjusted supply / seasonally adjusted sales
- r: Revised
- p: Preliminary
- Sales up, first-time buyers down.
- It's pretty easy to spot what's happening. New buyers are being increasingly squeezed out of this market. A wealth effect has kicked in with stock market euphoria.
- This is likely to reverse sharply when the stock market corrects.
- Economists will be wondering: "What happened?"
Mike "Mish" Shedlock