Home sales tumbled in November

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

The seasonally adjusted annualized rate was 4.09 million units. That’s lower than the 4.17 million housing units that analysts had predicted, and it’s a much deeper drop than typical monthly declines.

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

These counts are based on closings, so contracts were likely signed in September and October, when mortgage rates last 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 this year.

“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the Covid-19 economic shutdowns in 2020,” said Lawrence Yun, chief economist at NAR. “The main driver has been rapidly rising mortgage rates, which have hurt housing affordability and reduced incentives for homeowners to put their homes up for sale. Additionally, the inventory of available homes remains near lows. historical.”

Read more: Mortgage refinance demand jumped 6% last week

At the end of November, there were 1.14 million homes for sale, an increase of 2.7% compared to November last year, but at the current rate of sales, this represents a still low supply of 3.3 month.

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

“We have seen house prices decline from their summer highs over the past five months. At the same time, we have also seen rental growth decline for 10 consecutive months,” wrote George Ratiu, senior economist at Realtor.com in a statement. “However, the cost of real estate remains challenging for many home-hunting households, especially as high inflation and persistently high interest rates have eroded purchasing power. “

Sales fell in all regions, but fell the hardest 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, compared to 21 days in October and 18 days in November 2021. Despite the market downturn, 61% of homes were under contract in less than a month.

With prices still high and mortgage rates hitting a cyclical high, first-time buyers were left on the sidelines. They were responsible for 28% of sales in November, unchanged from October, and up slightly from 26% in November 2021. Historically, first-time buyers make up around 40% of the market. A separate survey of real estate agents put the annual share at 26%, the lowest since they started tracking.

Sales fell in all price categories, but plunged the most in the luxury over $1 million category, falling 41% year-over-year. This sector had seen the largest gain in the early years of the pandemic.

Mortgage rates have come off their recent highs, but whether that will be enough to offset rising prices remains to be seen.

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

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