The December 2019 Housing Market Recap shows the year ended strongly with an uptick in home sales, but the underlying story is the suppression of greater market growth by the ongoing lack of inventory. Total existing home sales rose in December after a fall in November. Sales were up in three regions, with only the Midwest showing a decrease. Prices rose yet again, continuing a trend that began in 2012. Days on the market rose month-to-month, but fell year-over-year, while inventory fell again, both month-to-month and year-over-year.
December existing home sales rose 3.6 percent from November, and are up an impressive 10.8 percent compared to December 2018, according to the National Association of Realtors® (NAR) December Existing Home Sales Report, released January 22nd.
Home prices rose yet again. The median price of existing homes sold in December was $274,500, an increase of 7.8 percent from December 2018 ($254,700). We’ve now reached 94 consecutive months of year-over-year price increases. The report notes that rising prices may be affecting job growth in areas that are experiencing housing affordability issues.
Days on the market (DOM) increased compared to November, moving from 38 to 41. This is still lower than the 46 DOM in December 2018. Forty-three percent of homes listed and sold within a month, showing that colder weather doesn’t mean a cold market!
Inventory fell 14.6 percent compared to November, and 8.5 percent year-over-year. At the current sales rate, the supply of unsold inventory was 3.0 months, down from 3.7 months a year ago. (NAR considers 6 months of inventory a balanced market.) Until inventory is more balanced, sellers will dominate the market and buyers will face challenges finding the homes they want.
NAR chief economist Lawrence Yun focused on inventory in his 2019 market comments. “I view 2019 as a neutral year for housing in terms of sales,” Yun said. “Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”
Regional sales and price results. Comparing December to November, sales rose 5.7 percent in the Northeast, 5.4 percent in the South and 4.6 percent in the West, but fell 1.5 percent in the Midwest. The Midwest led increases in year-over-year median home prices, rising 9.2 percent, followed by the West at 8.1 percent, the Northeast at 7.4 percent, and the South at 6.7 percent.
Hottest markets. If you’re wondering where homes are selling quickly, look no further than the Realtor.com Hottest Housing Markets report, which reflects supply and demand by comparing median days on the market (supply) and listing views per property (demand). In the December report, Fort Wayne, IN led the list for the sixth (!) month in a row. The rest of the December top ten are Burlington, NC, Topeka, KS, Vallejo-Fairfield, CA, San Francisco-Oakland-Hayward, CA, Pueblo, CO, Colorado Springs, CO, Modesto, CA, Fresno, CA, and Sacramento-Roseville-Arden-Arcade, CA.
The takeaway. January and February may not seem like the ideal time to buy or sell a home, but there are advantages that may not be obvious. Both sellers and buyers are very likely to be serious about, well, buying and selling. That means there may be room for negotiation, not only on price but also on deadlines or repairs. As always, if you are buying, think financing first. Meet with your First Choice Loan Services Inc. mortgage loan originator and be ready to make an offer, knowing that you have your financing in order.