Existing-home sales increased for the first time in five months as falling rates made homebuying more affordable.
Sales rose by 0.8% to a seasonally adjusted annual rate of 3.82 million, according to the latest data from the National Association of Realtors.
While this is a clear improvement from past months, year-over-year sales are down 7.3%, and NAR Chief Economist Lawrence Yun notes the data is still impacted by the sky-high mortgage rates of the past few months.
“The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November,” said NAR Chief Economist Lawrence Yun. “A marked turn can be expected as mortgage rates have plunged in recent weeks.”
The Northeast and West both experienced slumping sales, while the South and Midwest saw improvement.
NAR noted earlier this year that gains in the South reflect regional job growth stemming from the pandemic, giving buyers added incentive to move. Yun reaffirmed that thinking recently, predicting that the South will see the most gains in 2024.
“Metro markets in southern states will likely outperform others due to faster job increases, while markets in the Midwest will experience gains from being in the most affordable region,” he said.
The median price for an existing home was up 4% YOY to $387,600. This marks the fifth consecutive month of price increases.
Yun noted that home prices will continue to climb until housing stock increases significantly. Recent data suggest that new construction will be readily available in the new year, but the U.S. ideally needs millions more units, which will take time.
August’s inventory of unsold homes fell 1.7% to 1.13 million at the end of November, putting further pressure on homebuyers competing for affordable houses. This is a 3.5-month supply at the current sales pace.
The typical home stayed on the market for 20 days, while 72% of homes sold were on the market for less than a month.
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