New Home SalesCENSUS
561K
U.S. Housing Market · 2016
U.S. Housing Market in 2016
Existing SalesNAR
5.45M
Median PriceNAR
$235,500
30Y MortgagePMMS
3.65%
In 2016, the U.S. housing market recorded existing-home sales averaged 5.45 million, new-construction sales of 561K, and a 30-year fixed mortgage rate of 3.65%.
Existing-home sales rose 3.8% from 2015. the median existing-home price rose 5.9% to $235,500. the 30-year fixed mortgage fell 0.20 percentage points to 3.65%.
By the numbers — 2016: new-home sales 561K, existing-home sales 5.45M, median existing price $235,500, 30-year mortgage rate 3.65%.
Macroeconomic Context
Two thousand sixteen was a year of political earthquakes. The United Kingdom voted in June to leave the European Union — "Brexit" — in a result that shocked financial markets and sent global investors into U.S. Treasuries as a safe haven, briefly pushing mortgage rates to the lowest levels of the year. Then in November, Donald Trump's unexpected presidential election victory produced the opposite reaction: markets anticipated fiscal stimulus, infrastructure spending, and deregulation, sending Treasury yields and mortgage rates sharply higher. The 30-year fixed rate averaged roughly 3.6 to 3.7 percent for the year but closed December near 4.2 percent — a level that would define the 2017 market's affordability math.
GDP growth was approximately 1.6 percent — the weakest of the post-recession expansion — as business investment contracted amid global uncertainty. Consumer price inflation recovered to about 2.1 percent as energy prices stabilized. Unemployment reached 4.7 percent, and the Fed raised its benchmark rate once, in December — exactly the pace of 2015.
The labor market tightening that economists had long predicted would eventually lift wages began materializing more clearly in 2016. Average hourly earnings grew roughly 2.9 percent year-over-year by the end of the year, the fastest pace of the recovery. Rising wages were modestly positive for housing affordability, but their effect was offset by rising prices and the post-election mortgage rate surge.
Existing-home sales strengthened modestly from 2015 levels. The persistent inventory constraint — the number of homes available for sale had been falling since 2014 — was becoming the dominant story in residential real estate, setting up the severe supply scarcity that would characterize the market through the early 2020s.