Today the National Association of Realtors released its monthly existing home sales report. Sales came in at 5.49 million in December from an upwardly revised 5.65 million in November.
For 2016, My high end sales number prediction was 5.43 million. 2016 had the strongest demand for existing homes of the cycle ending in total of 5.45 million.
Existing-home sales finished 2016 at 5.45 million sales and surpassed 2015 (5.25 million) as the highest since 2006 (6.48 million).
My theme for 2016 was that demand would to rise due to mortgage buyers while the number of cash buyers fell. This would make the internal demand the best of the cycle.
Demand for homes has been the issue of this cycle, not inventory. Remember that inventory was higher in 2014 when demand went negative year over year even while rates were falling from the start of the year.
Mortgage demand, the life line of existing home sales, is only back to 1998 levels per the mortgage purchase application data. Demand is generated by demographics and housing affordability not inventory. This is why existing home sales are at the best levels in this decade while inventory is at cycle lows.
From Calculated Risk:
We are seeing very slow and steady demand for existing home sales even though these numbers are being boosted by higher than average number of cash buyers. However, demographics for home sales are getting better. We are still a few years away from a solid demographic patch of those coming to the age to buy homes. Homes. This bolus of potential buyers will come of age in the years 2020-2024.
Note: I will be speaking at the California Association of Realtors conference in Indian Wells, CA on Jan 27th. Joining me will be economist Dr. John Husing to speak on the topic of the U.S. housing market and the U.S. economy under President Donald Trump. Leslie Appleton Young will be moderating. It should be a great discussion.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami