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THE NEW NORMAL

The US housing market took a step back from “normal” last month

House for sale
AP Photo / Damian Dovarganes
Sales still aren’t far off “normal,” whatever that means.
This article is more than 2 years old.

The National Association of Realtors’ latest glimpse at US existing home sales didn’t look great.

Existing homes sales fell 6.1% in November from October, the biggest monthly decline since July 2010. That’s not quite what analysts were expecting, though many of them shook off the bad news and looked instead toward a broader, brighter economic picture.

“Within that context, the drop in existing home sales to 4,930,000 annualised last month, from what was a 14-month high of 5,250,000 in October, is nothing to be alarmed about,” wrote Capital Economics chief economist Paul Ashworth in a research note.

But with a longer context, even October’s high doesn’t look quite so impressive. Going back to 1999, last month’s existing sales number is still close to the median, though whether that means “normal” depends on whether you want to look at the overheated market from before the crash or the tighter, more sluggish iteration we’ve experienced during the recovery.

Another measure of the housing market, the percentage of first-time homebuyers, crept back toward normalcy last month. Newbies made up 31% of the market, but that’s still far from the 40% they usually represent, and both are less than the 27-year low recorded in an annual survey going back to 1981.

Here’s what the Wall Street Journal’s Nick Timiraos had to say (paywall) last month about that:

The headwinds facing young buyers are well known: higher student debt, rising rents and a weaker job market have made it harder for would-be buyers to save for a down payment and qualify for a mortgage, particularly in a lending environment where banks are much less willing to overlook credit blemishes or spotty incomes.

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