- 2016 was the best year for existing home sales since 2006 having closed with an estimated 5.45 million sales, an increase of 4.14% compared to 2015.
- Existing home sales fell slightly in December and was down just 0.3% year-over-year and down 2.8% from the previous month, when controlling for seasonality and household formation.
- Inventory dropped significantly reaching its second lowest level on record at 1.89 million homes, which is just 67.3% of its pre-recession level controlling for seasonality and household formation.
- Regionally, the uptick in existing home sales varied: the Northeast led the pack with a 5.71% jump over 2015, while the West showed the least amount of growth in sales with just an 1.71% increase since last year.
After reaching a nine-year high in 2015, existing home sales were up again in 2016, making it the best year since 2006. December’s 2.8% increase over November puts existing homes sales at 83.8% of the pre-recession average, controlling for seasonality and household formation.
While these numbers inject some positive news into the housing market, inventory remains a persistent problem. December saw the second lowest inventory on record. Low inventory will moderate existing home sales as we enter 2017 and keep numbers below the pre-recession average as homebuyers contend with a limited number of homes on the market.
The coming year also brings with it a new presidential administration for the United States, which may impact existing home sales. Mortgage rates, are more than 50 basis points higher than they were before the November election. Already there are signs that policy changes may have an impact on the cost of mortgages under the new administration. On his first day in office, for example, President Trump suspended a proposed 25 basis point mortgage insurance rate cut for FHA-insured loans. This isn’t great news for home buyers looking to take advantage of the FHA insurance rate decrease to help offset the recent rise in mortgage rates.
