By Alex Veiga, The Associated Press on December 20, 2023.
LOS ANGELES (AP) – Sales of previously occupied U.S. homes rose in November, ending a five-month skid, as easing mortgage rates encouraged homebuyers.
Existing home sales rose 0.8% last month from October to a seasonally adjusted annual rate of 3.82 million, the National Association of Realtors said Wednesday. That tops the 3.78 million sales pace economists were expecting, according to FactSet.
Sales were still down 7.3% compared with November last year.
The pickup in sales helped push up home prices compared with a year earlier for the fifth month in a row. The national median sales price rose 4% from November last year to $387,600.
“Home sales always respond to lower interest rates,” said Lawrence Yun, the NAR’s chief economist, adding that home sales have “no doubt” hit their low point of the current housing market cycle.
The average rate on a 30-year mortgage has eased after climbing to 7.79% in late October to its highest level since late 2000. The average dropped to 6.95% last week, according to mortgage buyer Freddie Mac.
The pullback in rates has echoed a decline in the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield, which in mid October surged to its highest level since 2007, has been falling on hopes that inflation has cooled enough for the Federal Reserve to finally stop raising interest rates.
Despite the recent decline, the average rate on a 30-year home loan remains sharply higher than just two years ago, when it was around 3%. The large gap between rates now and then is contributing to the low inventory of homes for sale by discouraging homeowners who locked in rock-bottom rates two years ago from selling.
There were 1.13 million homes on the market by the end of last month, down 1.7% from October, but up 0.9% from November last year, the NAR said. Before the pandemic, there were roughly twice as many homes on the market.
The available inventory at the end of last month amounted to a 3.5-month supply, going by the current sales pace. That’s down 3.6% from the previous month, but up from 3.3% from November 2022. In a more balanced market between buyers and sellers, there is a 4- to 5-month supply.
Homebuyers still had to navigate a competitive market due to the chronic shortage of homes for sale, especially the most affordable homes.
Homes sold last month typically within just 25 days after hitting the market, and about 19% of properties sold for more than their list price, a sign that many homes are still receiving multiple offers, the NAR said.