U.S. Housing Market Sees Unexpected Boost in November
A surprising surge in existing home sales has brought a glimmer of hope to the U.S. housing market, which has been struggling since 2022. According to the National Association of Realtors, sales of previously occupied homes rose 4.8% in November, reaching a seasonally adjusted annual rate of 4.15 million. This marks the fastest pace since March, driven by a wider selection of properties on the market.
Increased Inventory Drives Sales
The boost in sales can be attributed to a significant increase in the number of homes available for purchase. As of the end of November, there were 1.33 million unsold homes, a 17.7% increase from the same period last year. This translates to a 3.8-month supply at the current sales pace, up from 3.5 months in November last year. Lawrence Yun, the NAR’s chief economist, notes that “we are seeing sales increase because of this increase in inventory.”
Home Prices Continue to Rise
Despite the sales slump, home prices have continued to rise, with the national median sales price increasing 4.7% from last year to $406,100. This marks the 17th consecutive month of annual price growth. The shortage of homes for sale has helped prop up prices, which are now up 50% nationally since 2019.
Mortgage Rates Remain a Challenge
While mortgage rates have come down this year, they remain a significant obstacle for many would-be homebuyers. The average rate on a 30-year home loan eased to a two-year low of just above 6% in September but has mostly risen since then, reaching 6.6% last week. Many economists predict that mortgage rates will ease next year, but generally hold above 6%.
First-Time Homebuyers Struggle
First-time homebuyers, who don’t have any home equity to put toward their down payment, continue to struggle to afford a home. They accounted for just 30% of all homes sold last month, down from 40% historically. Limited inventory, especially in the more affordable price range, helps drive prices higher, making it even more challenging for first-time buyers.
Cash Buyers Play a Significant Role
Homebuyers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 25% of sales last month, down from 27% a year earlier. This highlights the ongoing challenges faced by those who rely on financing to purchase a home.
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