New Data Charts Increase in Potential Existing-Home Sales

Potential existing-home sales increased to a 6.1 million seasonally adjusted, annualized rate (SAAR) during November, according to First American Financial Corporation’s latest Potential Home Sales report.

First American has determined that last month’s market potential for existing-home sales grew by four percent on a year-over-year basis, an increase of 233,000 (SAAR) sales. The potential existing-home sales now stands at 98,000 (SAAR) or 1.6 percent below the pre-recession peak of market potential in July 2005. November also marked a staggering 103.5 percent increase from the nadir of market potential in December 2008.

“The market potential for existing-home sales continues to grow based on the strength of the broader economy, particularly wage growth, as well as improving access to credit. But, the market continues to underperform its potential, primarily a result of persistently tight inventory,” said First American Chief Economist Mark Fleming. “The post-election ‘Trump Bump’ in long-term U.S. treasury yields that triggered mortgage rates to rise above four percent, as well as the increase in the Federal Funds rate last week, will likely have a modest cooling impact on potential home sales heading into 2017. While rising rates reduce affordability for potential first-time homebuyers, the expected moderation of price appreciation will align house price growth more closely with recently increasing income growth to help offset reduced affordability in the year ahead.”