2017 Existing Home Sales Up 1.1 Percent Vs 2016 — Most Sales in Past 11-Years — Median Price Up 5.8 Percent

Existing home sales hit 5.511 million dwelling units for the 12-Months ending December 2017, up 1.1 percent versus a year ago and the most seen in 11 years, according to the National Association of Realtors® (NAR).   December 2017 monthly sales of 437,000 were down 2.3 percent compared to a year ago.

Median price for 2017 of $247,300 (not seasonally adjusted), posted a 5.8 percent gain versus 2017.  December 2017 median price of $246,800 was also up 5.8 percent year-over-year.  Median prices have now increased for 70 consecutive months on a year-over-year basis driven by demand outpacing supply.   The estimated 3.2 months inventory available for sale at the end of 2017 is approximately one-half the 6.0 month rate assumed normal for existing homes and is down from 3.6 months a year ago.  The 3.2 months listing inventory is the lowest recorded since data collection commenced by NAR on this metric in 1999.

The following graph shows the monthly median price and the total number of home sales in the prior 12 months commencing January 2014.

The next graph shows the monthly raw data (not seasonally adjusted) for each month commencing January 2014.  Following that are median prices for the same time period.  With just a 3.2 month estimated inventory on a seasonally adjusted basis with six months considered normal, supply continues to trail demand, resulting in rising home prices.  The 1.48 million listings for sale as of the end of December was down 10.3 percent compared to a year ago.

The final graph shows average home prices (not seasonally adjusted), which peaked at an all-time record $303,500 in June of 2017.   The decline since then is all due to the natural seasonal effect, although the December 2017 average price of $288,200 was up 4.8 percent versus a year ago.

Other metrics and insights from the NAR release included:

  • 1st-time homebuyers made up 32 percent of December’s closed sales, the same as a year ago but up from 29 percent in November
  • All-cash was paid in one-out-of-every-five homes (20 percent) bought in December 2017, similar to the 21 percent level a year ago
  • Investors bought 16 percent of all December transactions, unchanged from a year ago
  • Typical time on the market was 40 days in December 2017 versus 52 days a year ago.  44 percent of the homes sold in December were on the market less than one month
  • Distressed sales made up just five out of every 100 transactions in the month (up from four out of 100 a month ago), with four being foreclosures and just one out of 100 a short sale

The following information is repeated from the Jones on Real Estate Blog from a month ago:

These data are historical and were under tax laws and implications that have just changed given the passage of the 2017 Tax Cuts and Jobs Act. Two major changes for homeowners include:

  • Reduction in the Mortgage Interest Deduction (MID) shrinking from $1 million to $750,000. First and foremost note that current homeowners with a loan ranging from $750,001 to $1 million will still have full deductibility from interest paid on their primary dwelling. They essentially are grandfathered in on their current deductions for loans from $1 million and down. This will not impact existing mortgage loans in place. NAR reported in their press release that just 6 percent of homes today have loans greater than $750,000, so this change will likely impact just one in 20 home transactions that have mortgage loans purchased in the coming year.
  • Prior to the latest tax law changes, individuals were able to deduct from their Federal tax return the amount they paid is state and local taxes including income tax, property taxes and sales taxes. That deduction is now limited to a total of $10,000. Thus homeowners with property taxes greater than $10,000 will be capped at that deduction level. NAR reports that just one-in-20 (5 percent) pay more than $10,000 annually in property taxes. Those states  with state and local income taxes, may pay more total taxes, however.

To read the entire press release from NAR click https://www.nar.realtor/newsroom/existing-home-sales-fade-in-december-2017-sales-up-11-percent

As I said last month:

Am sticking with my forecast of a 1.96 percent increase in 2018 despite record-tight inventories in many markets. Texas and Florida (hurricanes) and California-Idaho-Washington (fires) housing markets should boom in 2018 assuming no new exogenous shocks as markets post-disaster typically out-perform. See my white paper on the impact of Hurricanes at http://blog.stewart.com/stewart/2017/09/13/hurricanes-housing-and-the-economy-analysis-from-stewart-chief-economist-ted-c-jones-phd/

Time will tell.



  1. Richard Wilson, Realtor, Punta Gorda, F

    I really enjoyed your talk at the Association of Realtors here in Punta Gorda. I saw a quote from Ray Dalio saying there was a 70% chance of a recession over the next 18-24 months. I haven’t seen an explanation of what he’s talking about. What do you think would prompt him to say that?

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