U.S. existing home sales rose at the fastest pace since March in November, as homebuyers were helped by a wider choice of properties on the market, even as mortgage rates nearly rose.
Existing home sales rose 4.8% last month from October to a seasonally adjusted annual rate of 4.15 million units, the National Association of Realtors said Thursday.
Sales increased by 6.1% compared to November last year, the largest year-on-year increase since June 2021.
Recent home sales have outpaced economists' expectations of 4.1 million, according to FactSet.
House prices rose for the 17th consecutive month on an annual basis.
The national median sales price increased 4.7% year-on-year to $406,100.
Even though home sales rose in November and October, they are still below the pace of last year, when they fell to their lowest level in nearly 30 years.
“The annual total is likely to fall short of last year's, and home sales will be the lowest since 1995,” said Lawrence Yun, NAR's chief economist.
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began rising from their pandemic-era lows. A lack of homes for sale is contributing to pushing up prices, which as of last month were up 50% nationwide since 2019.
Mortgage rates have fallen this year, with the average interest rate on a 30-year mortgage hitting a 23-year high of nearly 8% in October 2023, but that will change for many prospective homebuyers. is not enough.
Average interest rates fell to a two-year low of just over 6% in September, following the Federal Reserve's decision to lower key interest rates for the first time in four years. . However, it has mostly increased since then. Last week, it was 6.6%, according to mortgage buyer Freddie Mac.
Home sales that closed last month likely reflect deals signed in September and October, when mortgage rates were more attractive.
Looking ahead to next year, the outlook for mortgage interest rates remains uncertain. Many economists expect average interest rates on 30-year mortgages to ease next year, but Generally maintained at 6% or higher.
Mortgage rates are affected by several factors, including movements in the yield on the 10-year U.S. Treasury note, which lenders use as a guide to pricing mortgages. Bond yields soared Wednesday after the Federal Reserve signaled that next year's interest rate cuts will likely be smaller than expected months ago. Although central banks do not set mortgage rates, their actions and the trajectory of inflation influence the movement of 10-year Treasury yields.
Homebuyers who could afford to buy in November benefited from available home-to-home pickup services. According to NAR, there were 1.33 million unsold homes as of the end of last month, down 2.9% from October but up 17.7% from November of last year.
At the current sales pace, the supply is equivalent to 3.8 months, which is down from the 4.2-month pace at the end of October last year, but up from the 3.5-month pace at the end of November last year. Traditionally, a five to six month supply is considered a balanced market between buyers and sellers.
“Sales are increasing due to an increase in inventory,” Yun said.
Still, the supply of housing on the market remains about 30% lower than before the pandemic.
