US existing home sales surpassed the 4 million mark in November for the first time in six months, as house hunters reluctantly
Contracts rose 4.8% in November to 4.15 million year over year, the most since March, according to data released Thursday by the National Association of Realtors. That was better than the average estimate of economists polled by Bloomberg, who expected a figure of 4.09 million.
“Home sales momentum is increasing,” NAR chief economist Lawrence Yun said in a prepared statement. Although mortgage rates are still high, consumers are more comfortable with current levels and job creation is strong, he said on a call with reporters.
Apart from the improvement in November, the market for previously owned homes is stagnant, with annual sales hovering around 4 million homes for the past two years, a low level that is only three-quarters of the pre-pandemic trend. That’s partly due to a historic shortage of homes for sale as owners refuse to put their properties on the market and give up their existing 3% mortgage rates, which in turn has driven up prices.
Yun said annual home sales are on track to be even lower than last year, which was the case
Slowly but surely, inventories have started to rise this year as sellers come to terms with the current high financing costs. Although supply last month was down from October – which Yun said is typical for this time of year – it was still significantly higher than last November.
Affordability challenge
Affordability remains a major problem. The average sales price of a previously owned home rose 4.7% from a year earlier to $406,100 last month, a record for the month of November. And while the Federal Reserve has cut its benchmark interest rate by a full percentage point since September, mortgage rates remain double what they were at the end of 2021 and are expected to remain above 6% for at least two more years, according to the Mortgage Bankers. Association.
According to MBA data, the home financing cost for a 30-year fixed rate contract was 6.75% for the week ending December 13. Treasury yields – which influence mortgage rates – spiked on Wednesday after the Fed’s last meeting of 2024, in which central bankers forecast fewer rate cuts next year.
After the decision, Fed Chairman Jerome Powell said activity in the housing sector has been weak. He also said housing inflation is cooling, but more slowly than hoped.
In November, 53% of homes sold were on the market for less than a month, compared to 59% in October, while 18% were sold above the list price. Homes stayed on the market for an average of 32 days, compared to 29 days in the previous month.
Existing home sales represent the largest share of the U.S. total and are calculated when a contract is closed. The government will release figures on the sale of new homes on Tuesday.