Existing home sales in the US rise in November as mortgage rates fall

U.S. existing home sales rose modestly in November due to an easing of mortgage rates, but economic uncertainty is keeping potential buyers on the sidelines. Friday’s report from the National Association of Realtors also showed that the inventory of previously owned homes fell to the lowest level in eight months from October, limiting choice for people looking to buy. While housing supply typically declines heading into winter, year-over-year inventory growth has slowed, likely in response to sluggish demand. But limited supply could prevent an outright drop in house prices.

“Significant headwinds remain for housing market activity,” said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. “The recovery in the supply of existing homes for sale appears to have stalled in recent months. The weak labor market will limit the number of households confident enough to move, and affordability measures remain limited.”Home sales rose 0.5% last month to a seasonally adjusted annual rate of 4.13 million units, the NAR said. Economists polled by Reuters had forecast residential resales would rise to 4.15 million units.

Sales rose 4.1% in the Northeast, which accounts for a small share of the housing market. They rose 1.1% in the densely populated South but fell 2.0% in the Midwest, considered the most affordable region. In the West, sales remained unchanged.

Home sales fell 1.0% year-on-year in November.

The interest rate on the popular 30-year fixed-rate mortgage fell from 7.04% in mid-January to 6.19% at the end of November, according to data from mortgage bank Freddie Mac. However, there has been no further improvement, with an average of 6.21% this week. Mortgage rates follow the yield on ten-year US government bonds. Lower borrowing costs are partly offset by a sluggish labor market, with the unemployment rate rising to a more than four-year high of 4.6% in November and annual wage growth at its slowest pace since May 2021. With housing starts and new home sales reports for September yet to be released — they were delayed by the recent 43-day federal government shutdown — economists said it was difficult to assess home prices. market. Housing investment, including home construction and sales through real estate agent commissions, has declined in four of the past five quarters. The government will publish its first estimate of gross domestic product for the third quarter next Tuesday.

NO MEANINGFUL TURNOVER IN HOUSING

“Existing home sales data suggest that the decline in mortgage rates in recent months has boosted demand somewhat, but not enough to signal a meaningful reversal,” said Stephen Stanley, chief U.S. economist at Santander US Capital Markets.

Economic concerns linked to the labor market and higher prices slowed the improvement in consumer confidence in December, a separate report showed. According to the University of Michigan Surveys of Consumers, the Consumer Sentiment Index rose to 52.9 this month from 51.0 in November. However, that was a downward revision from an earlier preliminary estimate of 53.3.

“Despite some signs of improvement late in the year, sentiment remains nearly 30% lower than in December 2024 as wallet concerns continue to dominate consumers’ view of the economy,” said Joanne Hsu, director of the Surveys of Consumers.

Stock markets on Wall Street traded higher. The dollar gained against a basket of currencies. Yields on US government bonds rose.

The stock of existing homes fell 5.9% to 1.430 million units in November, the lowest level since March. Although the stock rose 7.5% from a year ago, the increase was smaller after double-digit gains in previous months. At November’s sales pace, it would take 4.2 months to deplete the current stock of existing homes, compared to 3.8 months a year ago.

“You can’t sell houses if you don’t have enough houses to sell,” said Carl Weinberg, chief economist at High Frequency Economics.

The average price of existing homes rose 1.2% last month from a year ago to $409,200. The average number of days that listed real estate is on the market has increased from 32 a year ago to 36.

Starters accounted for 30% of turnover in November, unchanged from a year ago. Economists and real estate agents say a 40% share in this category is needed for a robust housing market.

27% of transactions were cash sales, compared to 25% a year ago. Distressed sales, including bankruptcies, made up 2% of transactions and remained stable compared to a year ago.

“The near-term outlook for housing construction remains relatively stagnant, with little reason to expect a permanent increase in sales until mortgage rates fall significantly from current levels,” said Ben Ayers, senior economist at Nationwide.