Inventories Rising, Median Prices Holding
Sales of existing homes fell in November by 1.7 percent as inventories hit their highest point in more than 19 years, according to USA Today. This latest sign that housing market growth is tapering off was released Thursday by the industry’s largest trade group. The National Association of Realtors report that November’s sales of existing homes (which include single-family homes, town homes and condominiums), totaled 6.97 million units at a seasonally adjusted rate - the lowest sales level since March.
As sales fell below 7 million for the first time in eight months, inventories (or number of listed properties for sale) jumped to 2.90 million, marking the biggest supply since April 1986, when the U.S. housing inventory was estiamted at 3.04 million units. At the current rate of sales, the November inventory is the approximate equivalent of 5 months. The 1.7 percent decline was slightly steeper than the 1.3 percent drop analysts predicted before the report was released.
None of this has cooled prices, however. The November median sales price of an existing home stood at $215,000 nationally, up a sizable 13.2 percent from the same month last year. Some markets, such as Southwest Florida real estate, grew by more than 40 percent in the last year. The median price in Florida is now $250,500, up 31 percent from 12 months prior. Even with the drop in sales, economists are predicting a healthy housing market going forward, with the overall 2005 sales on pace to set a 5th consecutive annual record.
“We are really on track for a soft landing,” said David Lereah, the Realtors’ chief economist. “Moderately rising mortgage rates are allowing the housing market thus far to land safely, so there are no balloons popping,” he said.
Other common barometers — including a drop in new construction permits obtained in November — also have flashed signs that the market has peaked. That may be, but it’s no reason to panic if you’re looking to invest over the course of several years. Florida home loan rates are not expected to climb about 6.75 in the next 12 months, which would still represent a historically low figure. Prices should cool off enough to help first-time home buyers, but not so much as to hurt the long-range viability of investing in real estate.
