Home Sales Decline 1.7% in November
Sales of previously owned homes fell 1.7% in November, providing fresh evidence that the nation’s highflying housing market is losing altitude.
The latest snapshot of activity in the housing market, released by the National Assn. of Realtors on Thursday, showed that November’s sales of existing homes -- single-family houses, town homes and condominiums -- totaled a seasonally adjusted annual rate of 6.97 million units. It was the lowest level of sales since March and the second month in a row that sales fell.
But sales were just 0.1% below the level recorded in November 2004.
In other economic news, the number of new applicants for unemployment benefits rose last week, but even with the pickup, the level of applications still pointed to an improving job climate after hurricanes Katrina and Rita.
The Labor Department’s report showed that new applications for unemployment insurance increased by a seasonally adjusted 3,000 to 322,000 for the week ended Saturday. That matched economists’ expectations.
In the housing report, the November decline was steeper than the 1.3% drop that analysts had expected.
A more distressing indicator to some was the growing nationwide inventory of unsold homes. Inventory levels rose 1.2% at the end of November to 2.9 million -- a five-month supply at the current sales pace, the Realtors group said. That was up from a low of 3.8 months’ supply in January.
Banc of America Securities analyst Dan Oppenheim said the increase in inventories occurred entirely in the condo market because the inventory of single-family homes was unchanged at 2.48 million units. The inventory of condos, meanwhile, swelled to 5.9 months’ supply last month, up from 5.4 months in October.
He believes that inventory levels are more meaningful data about the current state of the market because the November sales number represents contracts signed as many as two months before.
“We expect sales to show more softness in the coming months based on the weakness this fall,” Oppenheim wrote in a note to clients.
In the West, sales of existing homes fell 3.7% to a pace of 1.58 million in November and were 3.7% below a year earlier. The annualized median existing-home price in the West was $328,000, up 19.3% from November 2004, the Realtors said.
Even with the drop, economists said the national and California housing markets remained in healthy shape and were on track to set annual sales records for the fifth year in a row.
In California, sales of detached, existing single-family homes are expected to reach 635,000 in 2005, an increase of 1.8% over last year’s record of 624,700. Sales are expected to decline 2% in 2006, the California Assn. of Realtors reported.
This year will be a record year for California home prices. As measured by the state’s Realtors group, the median price of a single-family home in California crossed the $500,000 threshold for the first time in April 2005. The annual median is expected to reach $523,150 in 2005 and increase 10% to $573,500 in 2006.
The U.S. median sales price of an existing home stood at $215,000 in November, up 13.2% from the same month last year. The median price is the point at which half the homes sell for more and half sell for less.