Auction.com projects that existing home sales for the month will fall between seasonally adjusted annual rates of 4.79 and 5.18 million annual sales, with a targeted number of 4.98 million. This prediction suggests that sales will be up slightly from one year ago and essentially flat compared with November’s lower-than-expected 4.93 million sales figure, which was released on Dec. 22 by the National Association of Realtors (NAR).
“In a month where consensus forecasts were all too optimistic, we are reminded that the housing market is recovering in fits and starts, and there remain significant headwinds,” said Auction.com Executive Vice President Rick Sharga. “Multiple factors may have contributed to November’s weaker-than-expected results, including a drop in inventory, declining investor activity, a sharp sales decline in the West, possibly reflecting affordability issues, and unexpectedly harsh weather conditions at the end of the month in the Midwest and Northeast.”
Auction.com research points to the increase in first-time homebuyers (comprising 31 percent of sales in November according to NAR), as well as the strengthening pace of annual household formations reported by the Census this Fall, as key ingredients for normalizing demand for housing among owner-occupiers. Additionally, a strengthening labor market suggests a firmer basis for demand heading into 2015, while lower mortgage rates and ongoing initiatives to improve mortgage accessibility could motivate more prospective buyers to enter the market.
As the Dec. 22 release of NAR’s November existing home sales data proves, the uneven market recovery and volatility of month-to-month numbers make it challenging to accurately predict results. Based on October’s sales estimate from NAR, Auction.com predicted that November home sales would measure a seasonally adjusted annual rate of 5.25 million – well above NAR’s November data, but in line with consensus estimates.