November home sales drop for 10th straight month
The National Association of Realtors reported that existing home sales were off by more than 7% from October and 35.4% year-over-year.
- Existing home sales have fallen almost every month in 2022.
- A “seasonal slump” in sales, higher mortgage rates and a tight inventory led to lower home sales in November, economists said.
- “We are in the midst of an unusual housing market, with contractions on both the buyer and seller side,” said Bright MLS chief economist Lisa Sturtevant.
Home sales in November were a big turkey for the real estate industry, slowed by higher mortgage rates and a seasonal sales slump due to the Thanksgiving holiday.
Existing home sales fell for the 10th straight month — declining to one of the lowest levels in more than a decade — according to data released Wednesday by the National Association of Realtors.
Sales were off 7.7% from October and down a whopping 35.4% from 2021, according to NAR's monthly sales report for existing homes.
The November decline represented the lowest level in home sales since 2011, with the exception of the Covid-related downturn in May 2020, Bright MLS chief economist Dr. Lisa Sturtevant noted.
"Fast-rising mortgage rates have priced out some buyers," Sturtevant said. "But the recent slowdown is also a result of the fact that some people who would have bought in 2022 or 2023 actually pushed their purchase earlier, to take advantage of the historically low rates."
Neda Navab, president of U.S. regional operations at Compass, agreed that interest rates were a key factor. "Home sales that closed in November likely began the process months earlier, and today's weak reading reflects the steep rise in mortgage interest rates that began in mid-August and peaked in late October." She added that the recent downward trend in mortgage rates is "a welcome reprieve" for buyers.
Another factor was the forecasted annual "seasonal slump" in real estate transactions as people paused business activities for the Thanksgiving holiday, Sturtevant said.
Lawrence Yun, chief economist at NAR, described November's housing market as "frozen." Yun attributed the inactivity to higher mortgage rates and a low supply of homes on the market.
"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," Yun said.
The supply of homes was down more than 6% from October but up slightly from the same month a year ago.
Home prices also fell for the fifth consecutive month, which Sturtevant said was the result of "the huge hit buyers' purchasing power has taken in the face of high home prices and fast-rising mortgage rates."
According to the NAR monthly report:
The median existing-home price was $370,700, up 3.5% from November 2021.
Properties were on the market for 24 days in November, up from 21 days last month and 18 days a year ago.
First-time buyers represented 28% of sales in November, which was the same as last month. But their numbers were up by 2% year over year.
Although a cooler housing market often opens up opportunities for buyers, low inventory across the U.S. coupled with mortgage rates double what they were a year ago are pricing many people out. And some potential sellers are waiting to list their homes, hoping for a return to a more heated market with higher sale prices.
"We are in the midst of an unusual housing market, with contractions on both the buyer and seller side," Sturtevant said. "While inventory has risen slightly, it is still relatively low in most markets. Buyers have more leverage on price and can more often negotiate terms, but it remains a seller's market across much of the country, for now, at least."
"Home sales that closed in November likely began the process months earlier, and today's weak reading reflects the steep rise in mortgage interest rates that began in mid-August and peaked in late October – a period in which average, 30-year rates rose from just over 5% to north of 7%. But rates have since fallen to about 6.3% from a high of almost 7.1% in early November, a welcome reprieve from the relentless rise in rates that characterized much of 2022 and which has severely limited housing affordability and dampened demand.