Existing Home Sales Drop But Prices Continue Climb

Home sales, at least those of existing homes, fell to a seasonally adjusted annual rate of 6.97 million units in November according to the sales report issued on Thursday by the National Association of Realtors (NAR). This is a 1.7 percent decrease from the 7.09 million units sold in October. Sales were also off 0.1 percent from the 6.98 million level established in November, 2004.

David Lereah, NAR's chief economist said that rising interest rates were responsible for decreasing sales, but said that "The current pace of homes sales activity remains historically strong." He noted that only eight other months have seen a high rate of sales. He projected that 2006 would, in spite of the interest rate situation, mark the second best year for home sales (after 2005) since the NAR started keeping records.

The median price for an existing home in November was $215,000, an increase of 13.2 percent from November, 2004 when the median was $190,000.

Housing inventory levels were up 1.2 percent at the end of November with 2.90 million existing homes (new construction is tracked separately) for sale. This is a 5 month supply at the current absorption or sales rate.

Single family home sales dropped 1.9 percent from October figures to a seasonally adjusted rate of 6.11 million units. This was down 0.5 percent from levels a year ago. Prices, however, increased 13.5 percent over the year to a median sales price of $213,500.

Condos and cooperatives lost 0.8 percent in volume to a seasonally adjusted rate of 857,000 in November, 7,000 less than October levels and 2.0 percent higher than the 840,000 existing condo/coop sales recorded in November 2004. The median condo price was $225,300; 10.7 percent higher than in November 2004. The report notes that, because the majority of condo sales are in major metropolitan areas, the median sales price tracks higher than the median price for single family homes which are more generally distributed.

The drop in home sales was most notable in the West where sales fell 3.7 percent between October and November to 1.58 million, a decline that was identical to that recorded since November of last year. Still, median house prices managed to increase nearly 20 percent to a median of $328,000 over the course of that one year period.

The Northeast region also saw sales decline 2.7 percent since October and were 4.4 percent lower than one year earlier. The median price rose 9.2 percent over the year to $250,000.

The Midwest, which usually fares the worst in surveys of housing sales and appreciation, slipped only 1.3 percent to an annually adjusted level of 1.56 million homes. This is 0.6 less than November, 2004 and prices increased 10.4 percent to a median of $170,000.

The South was the market least impacted by falling sales. Existing home sales slipped by 0.7 percent to 2.74 million units but this was still an increase of 3.8 percent from the previous year. The median price in the South also went up 8.2 percent to $184,000 over November, 2004.