LOS ANGELES (AP) — Sales of previously occupied U.S. homes slowed for the tenth consecutive in November, constrained by a tight inventory of properties on the market and mortgage rates averaging more than double what they were a year ago.
Existing home sales fell 7.7% last month from October to a seasonally adjusted annual rate of 4.09 million, the National Association of Realtors said Wednesday. That’s a slower sales pace than what economists had expected, according to FactSet. It also marks the longest streak of monthly sales declines on records going back to 1999.
Sales plunged 35.4% from November last year. Excluding the steep slowdown in sales that occurred in May 2020 at the start of the pandemic, sales are now at the slowest annual pace since November 2010, when the housing market was mired in a deep slump following the foreclosure crisis of the late 2000s.
Despite the slowdown, home prices continued to rise last month, though at a far smaller rate than just a few months ago. The national median home sales price rose 3.5% in November from a year earlier to $370,700.
Nearly a quarter of homes that sold last month fetched more than their list price, said Lawrence Yun, the NAR’s chief economist.
“We have this strange market where there are fewer buyers and fewer transactions, yet due to the limited supply some multiple offers are still happening and homes are still selling reasonably fast,” Yun said.
November’s housing snapshot is the latest evidence of a deepening slowdown from what was a blistering sales pace at the start of the year with mortgage rates that were still near historic lows.
Consider, the average rate on a 30-year mortgage was slightly above 3% in early January. Last week, it was at 6.31%, more than double the 3.12% average rate a year earlier, according to mortgage buyer Freddie Mac.
While mortgage rates have declined in recent weeks, they averaged 7.08% as recently as early November. The combination of high mortgage rates and still-rising home prices are keeping many would-be buyers on the sidelines.
Yun is forecasting that the average rate on a 30-year mortgage may fall to around 5.5% by next spring or summer.
“I think it’s not unreasonable,” he said. “And if that’s the case, I think the housing market will see some steady rebound in terms of sales activity.”
On average, homes sold in just 24 days of hitting the market last month, up from 21 days in October, the NAR said. That’s still a relatively quick turnaround, as before the pandemic homes typically sold more than 30 days after being listed for sale.
The inventory of homes on the market declined for the fourth consecutive month. Some 1.14 million homes were on the market by the end of November. That amounts to a 3.3 months’ supply at the current sales pace. In a more balanced market between buyers and sellers, there is a 5- to 6-month supply.