Home sales fell in November

Existing home sales fell 7.7% in November compared with October, according to the National Association of Realtors.

The seasonally adjusted annualized rate was 4.09 million units. That was weaker than the 4.17 million units housing analysts had forecast, and was a much deeper drop than usual monthly declines.

Sales fell 35.4% year-on-year, marking the tenth consecutive month of declines. This was the weakest pace since November 2010, with the exception of May 2020, when sales fell sharply, albeit briefly, in the early days of the Covid pandemic. In November 2010, the nation was mired in the Great Recession and a foreclosure crisis.

These counts are based on closings, so contracts were likely signed in September and October, when mortgage rates peaked before falling slightly last month. Rates are now about a percentage point lower than they were at the end of October, but still slightly more than double what they were at the start of the year.

“In essence, the residential real estate market froze in November, resembling the sales activity seen during the economic lockdowns of Covid-19 in 2020,” said Lawrence Yun, NAR’s chief economist. “The primary factor was the rapid rise in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. In addition, the available housing inventory remains near historic lows.”

Read more: Demand for mortgage refinancing rose 6% last week

At the end of November there were 1.14 million homes for sale, which is an increase of 2.7% compared to November last year, but at the current rate of sales represents a still low supply of 3, 3 months

Low supply kept prices higher than a year ago, up 3.5% to a median sales price of $370,700, but those year-over-year gains are quickly shrinking, a far cry from the double-digit gains seen in beginning of this year. It’s still the highest November price ever recorded by real estate agents, and at 129 consecutive months, it’s the longest streak of year-over-year price gains since real estate agents began tracking them in 1968. About 23% of homes sold above list price, due to low supply.

“We’ve seen home prices fall from their summer peaks over the past five months. At the same time, we’ve also seen rent growth pull back for 10 consecutive months,” wrote George Ratiu, senior economist at Realtor .com in a statement. “However, the cost of real estate remains a challenge for many households looking for a place to call home, particularly as high inflation and still high interest rates have been eroding purchasing power.”

Sales declined in all regions, but fell the most in the West, where prices are highest, down nearly 46% from a year ago.

Homes stayed on the market longer in November, an average of 24 days, up from 21 days in October and 18 days in November 2021. Despite the slower market, 61% of homes were contracted in less than a month

With prices still high and mortgage rates hitting cyclical highs, first-time buyers stayed away. They were responsible for 28% of sales in November, which was unchanged from October, and up slightly from 26% in November 2021. Historically, first-time buyers make up about 40% of the market. An independent survey of estate agents put the annual share at 26%, the lowest since they began tracking.

Sales fell across all price categories, but the steepest drop was in the million-dollar-plus luxury category, down 41% year-over-year. This sector had experienced the greatest gain in the first years of the pandemic.

Mortgage rates have come down from their recent highs, but it remains to be seen whether that will be enough to offset higher prices.

“The market may be thawing as mortgage rates have fallen for five straight weeks,” Yun added. “The average monthly mortgage payment is now almost $200 less than it was a few weeks ago, when interest rates peaked this year.”

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