November was another month in the latter part of 2019 where actual existing-home sales outperformed their potential, but that momentum seems unlikely to continue in 2020, First American said.

"In 2019, the dramatic increase in house-buying power and strong household formation fueled housing demand, increasing the market potential for existing-home sales," said First American Chief Economist Mark Fleming in a press release. "The boost from house-buying power and household formation was strong enough to overcome the negative impact from the increase in tenure length and tight supply."

"In 2020, the continuation of rising tenure length appears likely, which will prolong the housing supply shortage and dampen housing market potential. The question for housing market potential in 2020 is will increased demand from the millennials and strong house-buying power be enough to offset the ongoing drag from rising tenure length and limited supply?"

There were 2.8% more home sales than what First American estimated there potentially would be for November. Home resales exceed their potential by 146,340 seasonally adjusted annualized rate units that month.

Potential home sales for November totaled 5.24 million SAAR units, up 1.4% from October and 3.9% from November 2018.

In October, potential home sales outperformed by 4.6%, while in November 2018, they underperformed by 7.4%

Among the factors that boosted housing market potential this year were a 19% increase in home buying power compared with November 2018, and continued growth in both new household formation and home price appreciation.

But tenure length reached record levels in 2019, with an average that exceeded 11 years.

"The increase in tenure length had the greatest negative impact on housing market potential, reducing it by 383,100 potential home sales compared with one year ago," said Fleming. "Overall, tenure length has been increasing since the aftermath of the housing market crash, meaning fewer and fewer people are listing their homes for sale, keeping housing supply tight."

Tighter mortgage-lender credit standards and a lack of new supply entering the market were the other items that reduced potential, according to First American.