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Enjoying Christmas in a New Home Was Pricey This Year

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By Volodymyr TVERDOKHLIB @ Shutterstock.com

When new home sales are falling because there isn’t enough supply to meet demand, the only short term solution to balance the market is for prices to go up. It takes time to build new supply, but many of this year’s home buyers are trying to escape the city now. They want to have Christmas away from the densely crowded, COVID-filled cities, and they don’t care how much it costs.

A combination of rising prices and short supply actually pushed down the number of sales in November. The Wall Street Journal reports:

Homes sales slipped in November as the supply of properties for sale fell to a new low, the latest sign strong economic momentum in the middle of the year is easing in 2020’s final months.

Existing-home sales fell 2.5% in November from October to a seasonally adjusted annual rate of 6.69 million, the National Association of Realtors said Tuesday. It was the first decline in six months. The November sales of previously owned homes, which make up most of the housing market, rose 25.8% from a year earlier.

“Without a doubt, there are too many buyers in relation to the sellers,” said Lawrence Yun, NAR’s chief economist. “That is probably the main driver as to why the sales declined.”

Separately, U.S. consumers’ outlook on the economy darkened in December as coronavirus cases climbed nationwide, the Conference Board, a private research group, said Tuesday.

Meanwhile, economic growth during the summer months was revised slightly higher to a 33.4% annual pace, the Commerce Department said Tuesday. The gain came after the economy contracted during the first half of the year. Economists project a slower pace of growth in the final three months of 2020.

Record-low interest rates have boosted homebuying demand in recent months. Existing-home sales rose for five straight months through October to the highest seasonally adjusted annual rate since 2006. At the same time, fears of virus transmission have made potential sellers wary of putting their homes on the market.

The supply of homes on the market at the end of November was the lowest level on record going back to 1982. A widespread shortage of homes for sale has prompted competition among buyers and pushed prices higher.

The median existing-home price rose 14.6% from a year earlier to $310,800, NAR said.

Rising prices are making it difficult for first-time buyers to enter the market, real-estate agents say.

Americans are building themselves an “island” life, away from the troubles of the city. They want their families to enjoy peace and health this year.

Action Line: take time in 2021 to build your own island life anywhere you can.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com