Wealth Effect Propels Existing Home Sales: Up Most in 11 Years


Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years.

Stock Market Wealth Effect Kicks In

The National Association or Realtors reports Existing-Home Sales Soar 5.6 Percent in November to Strongest Pace in Over a Decade.

Lawrence Yun, NAR chief economist, provides this explanation. “Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end."

As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”


  • The median existing-home price for all housing types in November was $248,000, up 5.8 percent from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains.
  • Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.
  • First-time buyers were 29 percent of sales in November, which is down from 32 percent both in October and a year ago.

Regional Single-Family Sales by Price

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Supply in Months

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  • Supply in months is calculated as Seasonally adjusted supply / seasonally adjusted sales
  • r: Revised
  • p: Preliminary


  1. Sales up, first-time buyers down.
  2. It's pretty easy to spot what's happening. New buyers are being increasingly squeezed out of this market. A wealth effect has kicked in with stock market euphoria.
  3. This is likely to reverse sharply when the stock market corrects.
  4. Economists will be wondering: "What happened?"

Mike "Mish" Shedlock

Comments (4)
No. 1-4

Part of this may be due to the new tax plan. You can only deduct interest on the first $750k, but this is only for new mortgages. Mortgages originated before the end of this year are exempt. Buyers would have had to know in advance what would be passed.


Home equity loans will no longer be deductible. Even existing one are not grandfathered in. Millions of people have used equity loans to consolidate consumer credit, pay off student loans, buy cars and fund education. They purposely made unsecured debt secured debt because of the tax-benefit and now the rules have changed with just 10 days notice. That's unconscionable. The 1986 tax-reform at least came with a four-year phase out for old deductions.


Rising rates are sending a signal that now is the time to lock in leverage. 3-4% locked in 30 year mortgages are going to look pretty good when rates (and inflation) hit 7-9%.


I’ll believe 7-9% interest rates when I see them. I highly doubt we will see rates close to that within the next 5 years, if not longer.

Global Economics