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xisting-home sales closed out 2016 as the best year in a decade, despite sales declining in December as a result of on- going affordability tensions and historically low supply levels, according to the National Association of Realtors (NAR). Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, finished 2016 at 5.45 million sales and surpassed 2015 (5.25 million) as the highest since 2006 (6.48 million). In December, existing sales decreased 2.8 percent to a seasonally adjusted annual rate of 5.49 million in December from an upwardly revised 5.65 million in November. With last month's slide, sales are only 0.7 percent higher than a year ago. Lawrence Yun, NAR chief economist, says the housing market's best year since the Great Recession ended on a healthy but somewhat softer note. "Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," he says. "However, higher mortgage rates and home prices combined with record-low inventory levels stunted sales in much of the country in December. "While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end," Yun adds. e median existing-home price for all housing types in December was $232,200, up 4.0 percent from December 2015 ($223,200). December's price increase marks the 58th consecutive month of year- over-year gains. Total housing inventory at the end of December dropped 10.8 percent to 1.65 million existing homes available for sale, which is the lowest level since NAR began tracking the supply of all housing types in 1999. Existing-Home Sales in 2016 Record Best Year Since 2006 MARKET UPDATE NEWS Remodeling market optimism continues The National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) posted a reading of 53 in the fourth quarter of 2016, a decrease of four points from the previous quarter but on par with levels seen in the first half of 2016. Remodeler confidence has held firm in positive territory for 15 straight quarters. An RMI above 50 indicates more remod- elers report market activity is higher (com- pared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. "Many remodelers are seeing con- sumers commit to larger, long-term home improvement projects," says 2017 NAHB Remodelers chair Dan Bawden, CAPS, GMB, CGR, CGP, a remodeler from Houston. "As Americans are seeing wages and home values rise overall, it gives them greater confidence to go ahead and invest in their homes." Returning to levels seen early last year, the RMI's current market conditions index dipped to 53, down three points from the previous quarter. Among its components, major additions and alterations waned one point to 53, demand for smaller remodel- ing projects decreased by four points to 52, and the home maintenance and repair component declined by five points to 54. The index measuring future market in- dicators reached 52, about the same level E Inventory is 6.3 percent lower than a year ago (1.76 million), has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace (3.9 months in December 2015). "Housing affordability for both buying and renting remains a press- ing concern because of another year of insufficient home construction," Yun says. "Given current population and economic growth trends, housing starts should be in the range of 1.5 to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production." According to Freddie Mac, the average commitment rate for a 30- year, conventional, fixed-rate mortgage surged in December to 4.20 percent from 3.77 percent in November. December's average commit- ment rate was the highest rate since April 2014 (4.32 percent). First-time buyers were 32 percent of sales in December, which is unchanged both from November and a year ago. First-time buyers also represented 32 percent of sales in all of 2016. NAR's 2016 Profile of Home Buyers and Sellers—released in late 2016—revealed the annual share of first-time buyers was 35 percent. "Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first- time buyer," Yun says. "It'll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market." Properties typically stayed on the market for 52 days in December, up from 43 days in November but down from a year ago (58 days). Short sales were on the market the longest at a median of 97 days in December, while foreclosures sold in 53 days and nondistressed homes took 50 days. irty-seven percent of homes sold in December were on the market for less than a month. 8 February 2017 QR QualifiedRemodeler.com IN BRIEF