Existing Home Sales Surge by 25.8% in November

Existing home sales fell in November, from October of this year, by 2.5%. But professionals are not translating this into a market slow-down. Most view the market measured on a year-over-year basis, which reflects the number of existing home sales skyrocketed 25.8% from 2019. The year 2019 was an incredible year for existing home sales. 2020 is in a class by itself.

So the 2.5% slide from the prior month is clearly insignificant when viewed on an annual basis.

For the Garden State, existing single-family homes in October skyrocketed by 41.4% over 2019 sales. This, again, is uncharted waters never seen before.

The number of new listings also reflects a surge in sellers coming into this market, creating in many cases bidding wars.

Two factors continue to sustain the trajectory of the current market: the inventory shortage and the record low interest rates being charged by lenders. In addition, builders continue to battle skilled labor shortages and inflated material costs due to unusual market demand for such supplies.

Nationally, the median existing home price was nearly $311,000, or 14.6% above 2019 prices. In addition, this buying frenzy has taken a huge bite out of seller inventory, leaving the average number of homes available for sale at just 2.3 months supply. What is remarkable is that the median sales price in November of 2019 was $271,300. These prices increased across the board in every regional area. As reported in the press release issued by the National Association of Realtors, this represents the 105th straight month of year-over-year gains. The Association also reported that the typical home sold, on average, in 21 days nationally. This figure compares with the 38 days it took to sell on average back in 2019 as reported by the Association.

Inventory continues to suffer significant contraction even on a month-to-month basis. In most regions, inventory has fallen by double digits and in some cases up to 50% on a year-over-year basis. Inventory in November contracted nationally by 9.9% from October 2020 levels.

Economists for the National Association of Realtors project that the buyer-demand will continue well into 2021, and project that the average home price will increase in 2021 by 8%. That means if this trend continues, the median average price of a home sold in 2021 will hit nearly $335,000.

Interest rates are also one of the primary forces driving this buyer market. As compared with 2019 when the average mortgage rate was 3.94%, November’s average fixed mortgage rate has fallen to 2.77%.