Potential existing-home sales decreased in December to a 5.99 million seasonally adjusted annualized rate (SAAR), a 0.2 percent month-over-month decrease, according to new data from First American Financial Corp
. On a year-over-year basis, market potential for existing-home sales increased by 1.4 percent, a gain of 82,000 (SAAR) sales.
Currently, potential existing-home sales is 375,000 (SAAR), or 6.3 percent below the pre-recession peak of market potential of July 2005. The market for existing-home sales is underperforming its potential by 2 percent or an estimated 122,000 (SAAR) sales, while the market potential decreased by an estimated 1,000 (SAAR) sales between November and December.
“Faster economic growth, a healthy stock market, low unemployment and low mortgage rates are fueling substantial home-buying demand,” said Mark Fleming, Chief Economist at First American. “The pace of actual existing-home sales has surged in recent months and significantly narrowed the gap between actual market performance and market potential. Nonetheless, the market is still underperforming its potential. Existing-home sales have been restrained by an increasingly concerning shortage of properties for sale, which puts upward pressure on house prices. The shortage of homes for sale will likely continue in 2018 and continue to push prices higher.”