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A deep chill rippled through real estate last month, as existing-home sales continued to drop and home buyers continued to freeze in proceeding with their plans to move. Despite this, home prices are remaining resilient.
The National Association of REALTORS® reported on Wednesday that existing-home sales—completed transactions that include single-family homes, townhomes, condos and co-ops—fell 7% in November compared to the previous month. Year-over-year sales have plunged 35.4%. This marked the 10th consecutive month for existing-home sale declines, as the housing market continued to come off recent pandemic highs.
“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” says NAR Chief Economist Lawrence Yun. “The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. Plus, available housing inventory remains near historic lows.”
The 30-year fixed-rate mortgage averaged 6.31%, as of Dec. 15, which is up dramatically from its 3.12% average a year earlier. Mortgage rates reached a recent high of 7.08% last month, but rates have been coming down in recent weeks.
“The market may be thawing since mortgage rates have fallen for five straight weeks,” Yun adds. “The average monthly mortgage payment is now almost $200 less than it was several weeks ago when interest rates reached their peak for this year.”
Here’s a closer look at key housing indicators from the latest November sales data:
Home prices: The median existing-home sales price increased to $370,700, an increase of 3.5% from one year ago, NAR reports. The limited number of homes for sale continues to prop up home prices.
Days on the market: Sixty-one percent of homes sold in November were on the market for less than a month. Properties typically remained on the market for 24 days in November, up from 21 days in October and 18 days from a year earlier.
Housing inventories: At the end of November, the total housing inventory registered 1.14 million units, down 6.6% from October but up 2.7% from one year ago (1.11 million). Unsold inventory is at a 3.3-month supply at the current sales pace, still very tight by historical norms.
All-cash sales: All-cash transactions accounted for 26% of sales in November, up from 24% a year earlier. Investors and second-home buyers tend to comprise the biggest bulk of cash sales, purchasing 14% of homes in November, down slightly from 15% a year ago.
First-time home buyers: First-time buyers comprised 28% of sales in November, up from 26% a year earlier. NAR data shows that the annual share of first-time buyers this year was 26%, the lowest on record, as affordability woes continue to hit this sector of home buyers.
Distressed sales: Foreclosures and short sales represented 2% of sales in November, essentially unchanged from a year ago.
Regional Snapshot
All four major regions of the U.S. saw month-over-month and year-over-year declines. Here’s a closer look at how existing-home sales fared in your region:
Northeast: Existing-home sales dropped 7% from October, reaching an annual rate of 530,000 units. Sales were down 28.4% from November 2021. Median price: $394,700, an increase of 3.5% from the prior year.
Midwest: Sales posted a 5.6% decrease compared to the previous month and reached an annual rate of 1.02 million units. Sales are down 30.6% from one year ago. Median price: $268,600, up 3.9% from November 2021.
South: Sales fell 7.1% in November from October to an annual rate of 1.84 million units. That marks a 35% decrease from the previous year. Median price: $340,100, an increase of 4.4% from this time last year.
West: Existing-home sales dropped 12.5% from October, reaching an annual rate of 700,000 units. Sales are down 45.7% from one year ago. Median price: $569,800, a 2.0% increase from November 2021.
“The West region experienced the largest decline in home sales and the smallest increase in home prices compared to the other regions of the country,” Yun notes.