US Existing Home Sales Surge to 3-Year High

In a noteworthy turn of events reported this past Thursday, the U.Shousing market appears to be showing signs of recovery, marking a significant surge in existing home sales for the month of NovemberAccording to the National Association of Realtors (NAR), sales have exceeded expectations, breaching the annualized rate of 4 million homes sold for the first time in six months, despite the prevailing challenge of high mortgage loan ratesThis shift indicates a growing acceptance among buyers regarding the costs associated with home loans, which have remained above 6% for some time now.

The data reveals a total of 4.15 million existing home sales on an annualized basis—a figure that stands out as the highest since MarchExpectations had been set at 4.08 million, while the previous month's figures reflected 3.96 millionThis marks a remarkable 4.8% increase on a month-to-month basis, outpacing forecasts of 3%. Additionally, year-on-year comparisons show a 6.1% rise in sales, the most significant annual increase noted in three years.

The past two years have seen a decline in the sales of existing homes in the U.S., primarily attributable to what is commonly referred to as the "lock-in effect." This phenomenon describes a situation in which homeowners are reluctant to list their properties for sale, as doing so would mean relinquishing the advantage of lower mortgage interest rates previously secured

While the uptick in November’s sales is promising, overall sales in the housing market continue to grapple with elevated mortgage rates and limited inventory.

Consequently, the tight inventory levels are placing upward pressure on home prices, making the current U.Shousing market one of the least affordable in historyThe median sale price of existing homes in November rose by 4.7% year-on-year to reach $406,100, which stands as the highest recorded for the month in historyNotably, the increase from the previous month underscores a growing acceleration in home price rises.

Regionally, the biggest gains in home prices were recorded in the Northeast and Midwest, with year-on-year increases of 9.9% and 7.3%, respectivelyThese regional variations highlight the differing dynamics at play across the national housing market.

As sellers of existing homes begin to adapt to the prevailing high borrowing costs, inventory levels are gradually but steadily rising this year

• Alibaba Spins Off "Unity" AI App Team from Cloud Unit
• Uneven Recovery of the Semiconductor Market
• Will the Yen See Another Rate Hike Next January?
• Investment Strategy: Vision and Long-Term Success
• Application Breakthroughs Fuel Optical Hardware Boom

Although November saw a slight decrease in the supply of existing homes compared to October—a typical seasonal trend—this figure still remains substantially higher than it was in November of the previous year.

By the end of November, the inventory of homes for sale stood at 1.33 million units, which represents a 17.7% increase compared to the same month last yearAt the current pace of sales, it would take approximately 3.8 months to deplete the existing inventory—a figure that is still below the 5-month level considered a balanced market, indicating that while inventory is on an upward trajectory, the overall supply remains tight.

Additional insights from the NAR indicate that in November, approximately 53% of sold homes were on the market for less than a month, down from 59% in OctoberThe average time on the market was 32 days, increasing from 29 days the previous month

Around 18% of homes sold for more than the listing price, illuminating the ongoing demand despite rising costsMoreover, first-time homebuyers accounted for 30% of sales in November, slightly up from 27% in October, though still below historical averages where first-time buyers typically represent about 40% of the marketThis discrepancy suggests that affordability challenges continue to push many potential buyers out of the market.

In contrast, sales in the all-cash buying segment held steady at 25%, while investor purchases dipped to 13%, a decline from 18% in November of the previous yearNotably, the high-end market continues to drive sales; transactions of homes priced over $1 million surged by 24.5% year-on-year, while those priced below $100,000 saw a notable decrease of 24.1%.

NAR chief economist Lawrence Yun expressed optimism regarding the sales momentumHe noted that although mortgage rates are still considerably high, there is a growing consumer acclimatization to these rates alongside an increase in job opportunities, which supports buying power in the market.

Nevertheless, projections for 2024 suggest that annual existing home sales may fall below last year's levels, which had already marked the worst performance since 1995. This anticipated downturn raises questions regarding the decrease in investor participation; does this trend suggest that investors perceive home prices have peaked? Or could it imply other factors related to the stagnation of rental prices?

It is noteworthy that existing home sales account for approximately 90% of the total housing market activity in the U.S., with transactions typically being recorded at the point of closing, which occurs a month or two post-contract signing

As such, November’s data largely reflects purchase decisions made in accordance with the market conditions of September and OctoberInterestingly, mortgage rates had dipped to an 18-month low in September, only to rise sharply thereafter.

Despite the Federal Reserve having reduced benchmark interest rates by a cumulative full percentage point since September, mortgage rates remain elevated—approximately double their levels from late 2021. The recent Federal Reserve meeting, marking the last of the year, concluded with officials projecting fewer rate cuts in the upcoming year, causing U.STreasury yields to surge, notably impacting mortgage rates.

The Mortgage Bankers Association (MBA) predicts that mortgage rates will likely remain above 6% for at least the next two yearsAs of the week ending December 13, the cost of financing a home with a 30-year fixed rate mortgage was reported at 6.75%.

Fed Chair Jerome Powell recently acknowledged the ongoing weaknesses within the real estate sector, commenting that while housing inflation is tempering, the pace of this adjustment has not matched expectations.

Looking ahead, the U.S