Us home sales enjoy best year since 2006
Photo credit: Michael Patrick
US home sales have just posted their best year since 2006, as buyers climbed onto the housing ladder before the end of 2015.
Total existing-home sales climbed 14.7 per cent to a seasonally adjusted annual rate of 5.46 million in December from 4.76 million in November, according to the National Association of Realtors. After last month's turnaround (the largest monthly increase ever recorded), sales are now 7.7 per cent above a year ago and are now at their best annual level since 2006 (6.48 million).
Lawrence Yun, NAR chief economist, welcomed the "robust" rebound in activity, with all four major regions seeing large increases.
"Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7 per cent increase in sales," he comments. "In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas."
One of the factors spurring buyers to complete sales in December was the prospect of rising mortgage rates, as buyers took advantage of the warm end-of-year weather to beat the rise in costs. Indeed, the median existing-home price for all housing types in December was $224,100, up 7.6 per cent from December 2014 ($208,200). Last month's price increase marks the 46th consecutive month of year-over-year gains.
A Change in mortgage systems also contributed to December's rise, as the US introduced the "Know Before Your Owe" rules, which replace four disclosure forms with two new ones in an attempt to ensure that buyers are borrowing what they an afford.
Delayed closings resulting from the rollout of the initiative in November led to more sales being closed in December, although Yun notes "the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015".
First-time buyers accounted for 32 per cent of sales in December, up from 30 per cent in November and 29 per cent a year ago, but the annual share of first-timers is still at its lowest level in almost 30 years, warns the NAR.
"First-time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages," comments Yun. "While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first-time buyer activity in 2016."
All-cash sales, which usually indicate international purchases, made up 24 per cent of transactions in December, down from 27 per cent in November and 26 per cent a year ago, as rising costs impacted the potential yields available to investors. Nonetheless, US property regularly ranked as the most popular destination on TheMoveChannel.com among international buyers.