Sales of previously owned homes increased by 4.8% in November compared to October, as reported by the National Association of Realtors, reaching a seasonally adjusted annualized rate of 4.15 million units. This marked a 6.1% rise from November 2023, making it the third-highest pace of the year and the largest annual increase in three years.
The sales data is based on closings, indicating that contracts were likely signed in September and October. Mortgage rates had dropped to an 18-month low in September but then rose sharply in October.
Lawrence Yun, the chief economist for the NAR, noted that there is a growing momentum in home sales. He mentioned that more buyers are entering the market due to job growth, an increase in housing inventory compared to the previous year, and consumers adjusting to mortgage rates ranging between 6% and 7%.
By the end of October, the supply of homes for sale stood at 1.33 million units, up by 17.7% from the previous November, representing a 3.8-month supply at the current sales rate. A balanced market typically has a six-month supply.
The limited housing supply continued to drive up prices, with the median price in November reaching $406,100, a 4.7% increase year over year. The Northeast and Midwest regions saw the strongest price gains at 9.9% and 7.3%, respectively, with approximately 18% of homes selling above the list price.
First-time homebuyers accounted for 30% of November sales, up from 27% in October but slightly lower than the previous year. Cash transactions made up 25% of sales, while investor purchases decreased to 13% from 18% the previous November.
Sales growth was most significant in the higher-end market segment, with a 24.5% increase in homes priced over $1 million compared to a 24.1% drop in sales of homes priced below $100,000.
Following the latest Federal Reserve meeting, mortgage rates have risen again, with the average rate on the 30-year fixed increasing by 21 basis points on Wednesday. Expectations for fewer Fed rate cuts next year have contributed to this increase.
