Washington, Dec. 21 (BNA): US existing home sales fell to a two-and-a-half-year low in November, as the housing market continued to contract due to higher mortgage rates.
Existing home sales fell 7.7% to a seasonally adjusted annual rate of 4.09 million units last month, the National Association of Realtors said Wednesday, the lowest level since May 2020. Outside of a plunge during the first wave of the COVID-19 pandemic in spring 2020, it was This is the lowest level since November 2010, Reuters reported.
Sales have now fallen for 10 straight months, the longest stretch since 1999. They fell in all four regions in November. Economists polled by Reuters had expected home sales to drop to a rate of 4.20 million units.
Home resales, which account for a large portion of US home sales, fell 35.4% year over year in November.
The Fed’s fastest rate-raising cycle since the 1980s has had the biggest impact on housing. The US central bank is seeking to slow unacceptably high inflation by lowering demand for everything from housing to employment.
Reports this week showed confidence among homebuilders fell for the 12th straight month in December, while permits for single-family homebuilders fell to their lowest level in two-and-a-half years in November.
The average 30-year mortgage rate rose to more than 7% a few months ago, the highest rate since 2002, according to data from mortgage agency Freddie Mac. Although the rate has since eased to 6.31% last week, it is double what it was then a year ago.
The housing market boomed early in the pandemic as Americans sought larger properties to accommodate home offices, driving prices out of reach for many. Even as demand falls, supply remains tight, keeping home prices high, though the pace of increases has slowed.
The median current home price rose 3.5% from a year earlier to $370,700 in November. It was still the highest home price in any November and prices are still nearly 37% higher than their pre-pandemic level.
There were 1.14 million previously owned homes on the market, up 2.7% from a year ago. At the pace of November sales, it would take 3.3 months to deplete existing inventory of existing homes, up from 2.1 months a year ago. The four to seven month supply is seen as a healthy balance between supply and demand.
“Essentially, the residential real estate market froze in November, similar to the sales activity seen during the COVID-19 economic shutdowns in 2020,” said NAR chief economist Lawrence Yoon.
Properties typically stayed on the market for 24 days last month, up from 21 days in October. Sixty-one percent of homes sold in November had been on the market for less than a month.
First-time buyers accounted for 28% of sales, up from 26% a year ago. Cash sales accounted for 26% of transactions compared to 24% a year ago.
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