Existing Home Sales Dip 2.5%, Snapping 5-Month Streak
Sales of existing U.S. homes fell for the first time in five months as job growth and consumer confidence stalled, and some buyers were squeezed out by high prices.
November sales dipped to a seasonally-adjusted annual rate of 6.69 million, 2.5% lower than in October but still 25.8% higher than in November 2019, the National Association of Realtors (NAR) said Tuesday. Meanwhile, the inventory of homes for sale dropped 9.9% to a record low of just 1.28 million units. At the current sales pace, that’s enough to last only 2.3 months—the shortest duration on record.
As another wave of COVID-19 cases keeps people at home, consumers are holding back and the recovery in the labor market is languishing. Home sales have been a bright spot in the economy thus far—booming past pre-pandemic levels—but high demand and low supply has propelled prices higher, a dynamic that kept a lid on sales in November, economists said.
"Housing affordability, which had greatly benefitted from falling mortgage rates, (is) now being challenged due to record-high home prices," Lawrence Yun, NAR's chief economist, said in a statement. "That could place strain on some potential consumers, particularly first-time buyers."
Sale prices remain high, NAR said, though they’ve come down slightly from their recent peaks. The median sale price in November was $310,800, less than 1% lower than in October, but still 14.6% higher than in November 2019.
Despite the November decline in sales, Yun predicted sales would swing higher again next year as the benefits of a new $900-billion stimulus package and COVID-19 vaccines trickle into the economy. The 30-year fixed mortgage rate averaged 2.67% last week, a new record low, and rates are expected to hover at around 3% in the coming year.