Housing Market Sees Surge in Sales as Economy Continues to Grow
The housing market is experiencing a significant upswing, with sales of previously owned homes rising 4.8% in November compared to October, according to the National Association of Realtors. This marks a seasonally adjusted, annualized rate of 4.15 million units, a 6.1% increase from November 2023.
Job Market and Housing Inventory Drive Sales
The economy’s continued growth, coupled with an increase in housing inventory, has led to more buyers entering the market. Mortgage rates, which had fallen to an 18-month low in September, have stabilized between 6% and 7%, making it easier for consumers to adapt to the new normal.
Supply and Demand: A Delicate Balance
The supply of homes for sale at the end of October stood at 1.33 million units, a 17.7% increase from November of last year. At the current sales pace, this represents a 3.8-month supply, still below the 6-month supply considered balanced between buyer and seller. This tight supply continues to drive up prices, with the median price in November reaching $406,100, a 4.7% year-over-year increase.
Regional Price Gains and First-Time Homebuyers
Price gains were strongest in the Northeast and Midwest, with increases of 9.9% and 7.3%, respectively. First-time homebuyers accounted for 30% of November sales, up from 27% in October, although slightly lower than a year ago. Cash sales remained prominent, making up 25% of sales, while investors pulled back, accounting for only 13% of sales.
High-End Sales Drive Market Growth
The biggest sales gains continue to be seen in the higher end of the market, with sales of homes priced over $1 million surging 24.5% from November of last year. In contrast, sales of homes priced below $100,000 dropped 24.1%.
Mortgage Rates on the Rise Again
Mortgage rates have surged once more, with the average rate on the 30-year fixed increasing 21 basis points following the latest Federal Reserve meeting. Fewer Fed rate cuts are now expected next year, which may impact the housing market’s continued growth.
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