The National Association of Realtors released its Existing Home Sales report for the month of November, and it showed that sales rose 0.8%. This ended a five-month streak of monthly declines. Year-over-year sales did decline by 7.3%, but they did come in higher than estimates.
This report measures closings in November, which most likely come from buyers shopping in prior months like September and October when mortgage rates peaked at around 8%. Since rates have come down a bit and the worst should be behind us, buyers should begin to start searching for homes more aggressively.
Lawrence Yun, the Chief Economist for NAR, said, “The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November. A marked turn can be expected as mortgage rates have plunged in recent weeks.”
Sales are still being held back by inventory levels, which decreased 1.7% in November. There is a 3.5 months’ supply of homes, based on the pace of sales, which is tight, because between 4-5 months is considered normal. The median home price declined 1% to $387,600 in November but is up 4% year over year. The average time homes remained on the market was 25 days, while 62% of homes sold in less than 30 days. This proved that housing demand is still strong for what is out there even with higher interest rates. First-time homebuyers made up 31% of sales, from 28% in the previous report. Cash buyers accounted for 27% of sales, down from 29%, while Investors accounted for 18% of transactions, up from 15% in last month’s report.
This was an optimistic housing report, and it appears the worst may be behind us. The housing market is still very active as seen in this report. And this shows a break of trend while interest rates were higher than where they are today. Bottom line, the housing market is picking back up and the numbers should continue to improve from here.
Source : https://bit.ly/3RPX6yT
By: Jon Iacono