Existing home sales rise for first time since May

Monthly increase traced to lower mortgage rates

Existing Home Sales Rise for First Time in Six Months
(Photo Illustration by The Real Deal with Getty)

It was by no means a blizzard of activity, but existing home sales increased from October to November, ending a cold spell for the moribund U.S. market.

Sales of existing homes increased by 0.8 percent from October to November, reaching a seasonally adjusted annual rate of 3.82 million, according to a report from the National Association of Realtors. Year-over-year, existing home sales dropped 7.3 percent from 4.12 million a year ago.

The metric excludes new construction, which is gaining market share as for-sale inventory remains historically low.

While the jump in activity was modest, and occurred only in the Midwest and South, a monthly gain is unusual for this time of year and another positive sign for a housing market hampered by reluctant sellers and elevated mortgage rates. The nationwide increase in existing home sales came despite a 7.2 percent monthly decrease in the West and a 2.1 percent drop in the Northeast.

Borrowing costs have been receding in recent weeks — with the average 30-year rate dropping below 7 percent last week for the first time since August — while builders are getting to work on adding supply.

In a statement, Zillow senior economist Nicole Bachaud said the increased sales suggest buyers and sellers alike may be growing comfortable with the market.

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“Rates have continued to fall in early December, so it is possible that this upward trend for sales continues, even into the typically much slower winter housing season,” Bachaud said in a statement.

The decline in mortgage rates is also reducing the share of all-cash deals, which declined from 29 percent of transactions in October to 27 percent last month.

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Home prices continued to edge up. The median sale price of existing homes rose 4 percent year-over-year in November to $387,600. All four regions tracked in the report posted annual sale price increases, led by a 5.3 percent gain in the West.

For-sale inventory at the end of last month was 1.13 million homes, falling 1.7 percent from October to return to September’s level. Inventory was up 0.9 percent from a year before.

Unsold inventory amounted to a 3.5-month supply at last month’s sales pace, also down from October but up from a year ago.