December existing home sales rebound strongly from a disappointing November, suggesting "Know Before You Owe" disclosures played a role. 2015 was the best year for existing home sales in 10 years.
Last month, there was speculation that the new “Know Before You Owe” lending regulations, implemented in October, temporarily drove down home sales in November because the rules lengthened the closing process. December’s 14.7% sharp increase supports this speculation and suggests the large rebound was indeed a result of would-be November sales spilling into December.
In the end, 2015 was a very positive year for existing home sales, having finished with 6.5% more sales than 2014 with a total of 5.26 million existing homes sold. In fact, 2015 was the best year for existing home sales since 2006. For prospective homebuyers looking to buy in 2016, this is a good sign that inventory may continue to increase in 2016. That’s because increasing sales numbers require more inventory, and the trajectory since 2010 has been upward. However, supply dropped sharply year-over-year from 4.4 months supply to 3.9 months so tight inventory may continue to plague buyers in the early months of 2016.
We should expect next month’s numbers to stabilize from the erratic November and December swings as agents and lenders continue to adapt to these new lending regulations. Last, the Federal Reserve’s decision to increase interest rates by 0.25% last month didn’t impact existing home sales, since mortgage rates have actually dropped sharply over the past month.
Existing Home Sales Highlights:
- Existing home sales in December were up 7.7%% year-over-year, and 14.7% month-over-month.
- These numbers also end 2015 with an estimated 5.26 million sales on the year, which is up 6.5% compared to the 2014 calendar year.
- There was substantial regional variation in sales: the Northeast led the pack with an 11.9% increase year-over-year, followed by the Midwest with a 9.9% increase.