In a noteworthy development within the U.S. housing market, the National Association of Realtors (NAR) recently reported a 4.8% increase in sales of previously owned homes for November compared to the preceding month. This significant upswing places the seasonally adjusted annualized sales rate at approximately 4.15 million units, which marks a robust 6.1% growth relative to the same month last year. This data reveals that despite fluctuating mortgage rates, home sales momentum appears to be gaining traction—a promising sign for the housing sector.
Chief economist Lawrence Yun attributed this shift to a combination of factors, including job market growth and an uptick in housing inventory compared to 2022. As consumers adapt to a “new normal” where mortgage rates hover between 6% and 7%, more buyers are entering the market. Such adaptability is crucial in an environment characterized by economic uncertainty and fluctuating mortgage rates. Indeed, the decline in mortgage rates to an 18-month low in September seemingly helped prime the market for increased activity before rates surged again in October.
The data also illuminates the critical relationship between supply and demand in the current housing landscape. By the end of October, the inventory of homes for sale rose to 1.33 million units—a notable 17.7% increase from the same period last year. When viewed through the lens of sales velocity, this figure translates to a 3.8-month supply, significantly below the six-month benchmark that indicates a balanced market. This constrained supply continues to place upward pressure on home prices, with the median sales price in November reaching $406,100, representing a 4.7% annual increase.
Interestingly, the price gains have been most pronounced in specific regions, with the Northeast and Midwest witnessing increases of 9.9% and 7.3%, respectively. Additionally, about 18% of homes sold in November transacted at or above their list price, underscoring the competitive nature of the market. Moreover, while first-time homebuyers achieved a slight uptick in representation at 30% of sales, the statistics reveal a slight decrease compared to the previous year.
Shifts in investor behavior also merit attention. Cash transactions accounted for 25% of home sales, reinforcing the notion that liquid capital remains a powerful tool in real estate. However, the participation of investors saw a decline, decreasing from 18% to 13% year over year. This retreat raises intriguing questions about market perceptions concerning property valuations and rental market viability.
Looking forward, rising mortgage rates pose challenges for buyers and sellers alike, as the average rate on the 30-year fixed mortgage rose 21 basis points following the Federal Reserve’s latest meeting. With fewer rate cuts anticipated next year, the balance of power within the housing market will continue to evolve, making it essential for prospective buyers and investors to stay attuned to these changes as they navigate a dynamic and competitive real estate landscape.