The National Association of Realtors (NAR) reported that sales of existing homes, or resales, declined sharply in December 2017. Falling 3.6% from November (revised lower), that merely suggests what other data has been pointing toward. The hurricanes that hit the South caused distortions in economic conditions, bunching up activity into especially October and November. The lower estimates for December appear to be little more than the (expected) dissipation of those storm disturbances.
For December, the NAR estimates 5.57 million (SAAR) homes were sold. That’s more in line with sales levels from earlier in the year, before the housing market slid/cooled earlier last summer prior to Harvey’s arrival.
The 6-month average for resales, a less noisy comparison given the disruptions, show pretty clearly that the trend in real estate isn’t all that positive. At 5.5 million, that’s where it was to end 2016, right in line with the small year-over-year gain for the year as a whole (just 1.1%).
Because even the smallest increase from 2016 makes 2017 the highest sales in more than a decade, that’s what will get reported as a headline. The NAR’s press release puts it right in the first paragraph, noting that sales last year “ended up being the best year for sales in 11 years.” They are technically correct, but the characterization remains ultimately meaningless.
It’s what’s going on underneath the headline that really matters (as always). The reluctance of Americans to sell their houses has become such a contradiction to the attempt to paint the housing market, and therefore the overall economic condition, as healthy, even robust. Prices are rising, in some places quickly. Yet, inventory of available-for-sale homes continues to decline, sharply once again in December.
It’s a glaring dichotomy that ever the NAR’s Chief Economist, Larry Yun, has been forced to grudgingly address.
