In a promising turn of events for the housing sector, the National Association of Realtors (NAR) reported a significant increase in the sales of previously owned homes. Sales surged by 4.8% in November compared to October, resulting in a seasonally adjusted annualized rate of 4.15 million units. This uptick not only marks the third-highest sales pace of the year but also reflects a continued year-over-year increase of 6.1%. Such momentum indicates a potentially robust recovery in the housing market, despite various economic uncertainties.
Lawrence Yun, chief economist for the NAR, attributed this rising wave of sales to various factors, primarily an increase in job growth, which encourages consumer confidence. The latest data suggests that the economy is gradually adjusting to a “new normal” wherein prospective homeowners are getting accustomed to mortgage rates fluctuating between 6% and 7%. The decline in mortgage rates to an 18-month low in September stirred initial market activity, but a spike in October suggests this dynamic remains complex. As buyers navigate this environment, it appears more transactions are up for grabs.
The inventory landscape further illustrates the challenges faced by potential buyers. As of the end of October, the total supply of homes for sale reached 1.33 million units, reflecting a notable increase of 17.7% from the previous year. However, at the current sales pace, this figure translates to a mere 3.8-month supply—far below the 6-month equilibrium that typically indicates a balanced market. This tight supply continues to exert upward pressure on home prices, with the median price for a home rising to $406,100—an annual increase of 4.7%.
Interestingly, the annual price comparison has shown renewed vigor, with price hikes recurring across regions. The Northeast and Midwest exhibited the most substantial increases, achieving price gains of 9.9% and 7.3%, respectively. Additionally, around 18% of homes sold went for above their listing price, showcasing an increasingly competitive market. First-time homebuyers seized more opportunities in November, now accounting for 30% of total sales—a slight recovery from October’s 27% but still trailing previous year figures.
Cash transactions remain prevalent in the current landscape, constituting about 25% of all sales. However, there’s a noticeable retreat from investors, whose representation in the market shrank to 13%, down from 18% a year prior. This decline prompts speculation about whether investors are perceiving the market as peaking or are reacting to a slowdown in rental price growth. Notably, the high-end market is flourishing, particularly dramatic with a striking 24.5% increase in sales for homes exceeding $1 million, contrasting sharply with a 24.1% drop in sales for homes priced below $100,000.
The recent rise in mortgage rates—observed as average rates on 30-year fixed loans surged 21 basis points—serves as a reminder of the housing market’s volatility. With fewer anticipated Federal Reserve rate cuts in the upcoming year, the trajectory for buyers and sellers may shift once again, highlighting the need for market participants to remain agile and well-informed. As November’s report illustrates, while optimism prevails, the complexities of supply, demand, and financing remain pivotal in shaping future market outcomes.