Utah home sales continued their upward trend in November, rising more than 10 percent compared to last year and marking the sixth consecutive month of home sales increases, according to a new report from the Utah Association of Realtors. During November, Utah Realtors sold 2,523 homes, townhomes and condominiums versus 2,285 sold last year during the same month.

Sales were also up for the year as a whole. Since January, home sales were 8 percent higher than they were during the January-through-November period in 2010. Since the beginning of the year, more than 30,000 homes have been sold.

The rise in home sales should continue into subsequent months. The number of contracts signed to buy homes rose 31 percent in November, compared to the same month last year. Pending sales measure future activity since it typically takes a month or two after the contract is signed for the home to close and officially sell. Pending sales have increased for seven consecutive months.

While the indicators point to increased demand, they also point to decreased supply. In November, the number of homes for sale fell more than 23 percent compared to last year. At the end of the month, 21,731 homes were listed for sale, compared to 28,308 last year. Inventory levels have been falling for a year, with November marking the fewest number of homes on the market since April 2007.

Fewer homes were put up for sale in November. The number of new listings was down about 12 percent. About 500 fewer homes went on the market versus last November.  

The combination of higher demand and lower supply means homes are being absorbed at a faster rate. In November, it would have taken 7.9 months to sell all of the homes on the market at the average sales pace assuming no new inventory came on the market. That’s down significantly from last year when the month’s supply of inventory was 11.2. This is the fastest rate of inventory absorption since September 2007.

Inventory levels in a balanced market are generally in the six- to seven-month range. As this number heads into that territory, it is more likely that prices will rise.

Nevertheless, price improvements lag the progress made in other areas. The median sales price of Utah homes sold was $170,000 in November, down about 9 percent from last year’s median of $186,250. For the year as a whole, prices are down about 8 percent compared to the first 11 months of last year.

The low prices combined with another month of record-low interest rates brought affordability close to the record high. The UAR’s Affordability Index stood at 167 in November, which means a typical Utah family makes 167 percent of what is needed to buy the median-priced home under prevailing interest rates. The record was set in October when the index registered 168.

In November, the interest rate on a 30-year fixed mortgage averaged 3.99 percent, according to Freddie Mac. That’s the lowest average monthly rate since the company began tracking rates in 1971.

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