In November, sales of previously occupied U.S. homes saw a significant increase, reaching their fastest pace since March. The surge in sales was driven by a wider selection of properties available on the market, despite a slight uptick in mortgage rates.
According to the National Association of Realtors, existing home sales rose by 4.8% last month to a seasonally adjusted annual rate of 4.15 million units. This marked a 6.1% increase compared to November of the previous year, representing the largest year-over-year gain since June 2021.
The median sales price for homes also saw a rise, increasing by 4.7% from the previous year to $406,100. However, despite these positive trends, home sales are still below last year's levels, with Lawrence Yun, the NAR's chief economist, predicting that this year's total sales will be the lowest since 1995.
The U.S. housing market has been experiencing a sales slump since 2022, attributed in part to rising mortgage rates and a shortage of available homes for sale. Home prices have surged by 50% nationally since 2019, further impacting affordability for potential buyers.
Mortgage rates have fluctuated throughout the year, with the average rate on a 30-year home loan reaching a high of nearly 8% in October 2023. While rates have since decreased, they remain above 6%, posing challenges for many prospective homebuyers.
Looking ahead, economists anticipate that mortgage rates will continue to hover above 6% next year, influenced by factors such as the yield on U.S. 10-year Treasury bonds. The Federal Reserve's recent decision to cut interest rates has also played a role in shaping mortgage rate trends.
Despite the challenges posed by rising rates, homebuyers in November benefited from an increase in available inventory. The supply of unsold homes stood at 1.33 million units, up 17.7% from the previous year. However, inventory levels remain significantly lower than pre-pandemic levels, impacting affordability and driving prices higher.
First-time homebuyers, in particular, continue to face hurdles in entering the market, with limited inventory in the affordable price range. While they represented 30% of all home sales last month, down from historical averages, buyers able to pay in cash accounted for 25% of sales.
Overall, the housing market continues to navigate challenges posed by fluctuating mortgage rates and inventory levels, with affordability remaining a key concern for prospective buyers.
