The numbers: U.S. home sales rose in November for the first time since May, in an early sign of a housing-market recovery as mortgage rates begin to fall.
Despite interest rates remaining at a multidecade high in November, home sales inched up as aspiring homeowners saw an opportunity to buy.
Sales of previously owned homes rose by 0.8% to an annual rate of 3.82 million in November, the National Association of Realtors said Wednesday.
That’s the number of homes that would be sold over an entire year if sales took place at the same rate in every month as in November. The numbers are seasonally adjusted.
The increase in sales exceeded expectations on Wall Street. The forecast was for existing-home sales to total 3.76 million in November.
Compared with November 2022, home sales were down by 7.3%.
Key details: The median price for an existing home rose to $387,600 in November. Prices were up 4% from a year ago, and that was the highest price for the month of November since NAR began tracking the data.
Home prices peaked in June 2022, when the median price of a resale home hit $413,800.
Around 19% of properties are being sold above list price, the NAR noted.
The total number of homes for sale in November rose 0.9% from last year, to 1.13 million units.
Homes listed for sale remained on the market for 25 days on average, up from the previous month. Last November, homes were only on the market for 24 days.
Sales of existing homes were mixed across the nation. Sales rose the most in the South, going up by 4.7%. The median price of a home in that region was $351,500.
All-cash buyers accounted for 27% of sales. The share of individual investors or second-home buyers was 18%. About 31% of homes were sold to first-time home buyers.
Big picture: The U.S. housing market is showing signs of an early recovery as mortgage rates dip below 7% for the first time since August.
Falling rates will likely draw out keen home buyers who have been waiting for an opportunity. The 30-year rate is at a five-month low, and mortgage bankers expect it to continue to fall through 2024.
But with rates still far above the 3% range, resale inventory will continue to be a challenge as existing homeowners find little incentive to give their low rates up and buy another home that will have higher interest payments.
What the realtors said: “This is not a meaningful rise,” Lawrence Yun, chief economist at the NAR, said about the increase in home sales in November, adding that it was “statistical noise.”
He also added that even though rates fell considerably in mid-December, the housing market may not see a recovery for at least two or three months, because buyers need time to react to the dip and to go through the home-buying process, from mortgage approval to appraisal and closing.
“Overall, mortgage rates are lower. We welcome it, but the big constraint throughout the year has been lack of inventory,” Yun said.
He noted that rates need to fall further to encourage homeowners to sell their properties.
As for home prices, they “keep marching higher,” Yun said. “Only a dramatic rise in supply will dampen price appreciation.”
What are they saying? “The upshot is that it’s very likely October marked the trough in existing home sales, and that they will now continue to rise,” Thomas Ryan, property economist at Capital Economics, wrote in a note.
Even though the NAR and others express optimism about the housing market potentially turning around, “the reality is that homeowners sitting on 3% or 4% mortgages are still unlikely to be enticed to move by current mortgage rate levels, even as the demand for homes is reportedly already perking up,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.
Market reaction: Stocks
DJIA
SPX
were down in early trading on Wednesday. The yield on the 10-year note
BX:TMUBMUSD10Y
was below 3.9%.
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