What You Need to Know about December Housing Numbers
Highlights from the latest housing report from the National Association of Realtors
Increasing consumer confidence and stable housing affordability contributed to a surge in home buying last month. Sales jumped 14.7% compared with November, according to the National Association of Realtors (NAR). But the biggest factor in the gain was due to the impact of new mortgage disclosure rules that pushed sales from November into December. Sales were up only 7.7% from a year earlier.
Overall, sales bounced back from an artificially depressed level, according to Lawrence Yun, NAR’s chief economist.
“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” he said.
New homes are not being built quickly enough in the nation’s hottest markets to keep up with demand. Housing starts did rise 11% during 2015, according to the Commerce Department, but still trail boom year construction figures by about half. And the pace of new construction slowed recently — housing starts actually dipped late in 2015 — so shortages of homes for sale will likely persist.
As demand has outpaced supply, demand has driven up prices. Luckily, continued low financing costs have helped keep homes affordable. The Fed’s mid-December rate hike has had little impact on mortgage rates. As a matter of fact, the interest rate on a 30-year loan barely budged, hovering around 4% in December, according to Freddie Mac’s weekly rate report. They have even fallen off again in the first two weeks of 2016.
There had been some consumer fears that mortgage rates would spike on the heels of the Fed rate increase and some buyers may have pushed their purchases forward to save on financing costs, according to Yun. But mortgage rates tend to mirror long-term bond yields, said Keith Gumbinger of HSH.com, a mortgage information company, and bond yields remain very low — under 2.3% for most of December.
“There’s tremendous global demand for Treasuries right now,” said Gumbinger.
The national median home price hit $224,100 in December, up 7.6% compared with 12 months earlier.
Regionally, home sales in the Northeast grew about 8.7% compared with November and were up 11.9% from 12 months earlier. It’s the second most expensive area of the country with a median sales price of $255,700.
Sales rose 14.6% month-over-month in the South and are 4.6% higher than a year ago. Homes sold there at a median of $196,100.
Midwestern sales jumped 10.9%, at a median of $171,000, in December. Sales were up 9.9% from a year ago.
In the pricey West, where the median home sold for $321,100, sales spiked a whopping 23.2%. Compared with a year earlier, closings were up 8.9%.
For a glimpse at what’s out there, check out this Birmingham, MI home (pictured above), where $879,000 gets you three bedrooms, three-and-a-half baths and a beautiful exterior stone construction.