Data from the National Association of Realtors (NAR) shows that Americans bought homes in November at the fastest pace in nearly a decade.
Sales of existing homes rose 0.7 percent last month to a seasonally adjusted annual rate of 5.61 million housing units.
That was up from a downwardly revised 5.57 million in October and the highest since sales hit a 5.79 million pace in February 2007. Sales were up 15 percent from a year earlier.
While the news was good, potential challenges loom.
A deepening shortage of houses, higher prices and rising mortgage rates could present problems for the conventional housing market in the next year.
“We have a housing shortage,” said Lawrence Yun, the chief economist for NAR. “We are not building enough housing.”
As the Daily Business News previously reported, 76 percent of builders indicated availability of labor and cost as their major problems.
While home sales rose 8 percent in the Northeast and 1.4 percent in the South, sales were down in the West and Midwest.
Less than 1.9 million homes were on the market, down 9 percent from a year earlier. The tighter supply of homes pushed the median price up to $234,000, an increase of almost 7 percent from a year ago.
With the increase in sales activity, the rate on the benchmark 30-year fixed rate mortgage last week rose to a 52-week high of 4.16 percent.
According to ABC News, U.S. interest rates have been climbing since the November 8th election of Donald Trump, and investors have bid rates higher because they expect Trump’s program of tax cuts and higher spending on defense and infrastructure will boost economic growth and inflation.
The NAR is predicting that the combination of higher rates and declining affordability of conventional housing in many parts of the country likely will lead to only a small gain in sales of existing homes next year — an estimated 2 percent increase to about 5.52 million.
Conventional Housing Challenges = Manufactured Home Opportunities?
While manufactured home sales are about 1 percent of the total of all U.S. housing sales (new, existing, manufactured, etc.), they represent one of the most effective ways to deliver a quality, affordable solution in a difficult housing market.
“Some prospective buyers are going to be straining to get to an affordable monthly payment with mortgage rates higher and may take a harder line on prices (or settle for less home) to make the numbers work,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Therein lies the opportunity for manufactured housing, so long as challenges such as discriminatory zoning are dealt with. See a related report, linked here.
For Masthead commentary on how HUD Secretary nominee, Dr. Ben Carson, could help ease the affordable housing and save taxpayer’s money by enforcing existing law, click here. ##
(Image credits are as shown above.)
Submitted by RC Williams to the Daily Business News for MHProNews.