Existing home sales grew in the last quarter of 2017, depleting inventory to an all-time low, the National Association of Realtors says.
In its latest quarterly report this week, NAR highlights the impact of home prices from the 10.3% year-over-year drop in available homes to 1.48 million. Supply was down to just 3.5 months from 4.5 months in Q3, 2017.
Prices for existing single-family homes gained in 92% of national markets and reached a median of $247,800, a 5.3% annual rise. This was a slightly slower pace than in the previous quarter (5.6% year-over-year).
"A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices," said NAR chief economist Lawrence Yun. "Remarkably, home prices have risen a cumulative 48% since 2011, yet during this same timeframe, incomes are up only 15%. In the West region, where very healthy labor markets are driving demand, the gap is even wider."
Sales of existing homes in the last three months of 2017 increased 4.3% to a seasonally-adjusted annual rate of 5.62 million compared to the third quarter; and were 1.3% higher than Q4, 2016.
Outlook for 2018 is mixed
"While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally," said Yun. "In areas where homebuilding has severely lagged job creation in recent years, it's going to be a slow slog before there's enough new construction to cool price appreciation to a pace that aligns more closely with incomes."
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