Existing home sales decreased 2.5% in November, ending the five-month streak of month-over-month gains, to a seasonally adjusted annual rate of 6.85 million, according to a report from the National Association of Realtors on Tuesday. Compared to last November, home sales are still up 25.8%.
“Home sales in November took a marginal step back, but sales for all of 2020 are already on pace to surpass last year’s levels,” said Lawrence Yun, NAR’s chief economist. “Given the COVID-19 pandemic, it’s amazing that the housing sector is outperforming expectations.”
At the end of November, housing inventory declined yet again, totaling 1.28 million. This is down 9.9% from October and down 22% from a year ago. Housing inventory hit another record low in November, totaling 2.3 months worth of inventory. A year ago, inventory was at 3.7 months.
“Circumstances are far from being back to the pre-pandemic normal,” Yun said. “However, the latest stimulus package and with the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021.”
Zillow Economist Matthew Speakman said that although home sales decreased in November, the housing market is still ending the year on a strong note.
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“With mortgage rates appearing likely to hold near recent lows in the months ahead, and with a wave of people aging into prime homebuying age and looking to enter the market, these firm levels of demand for housing should endure into 2021 and prompt more activity throughout the entire housing market,” Speakman said. “Today’s release may go down as a step backward for the housing market, but in reality, it is the latest reflection of the housing market’s strength as 2020 nears its end.”
The median existing-home price in November was $310,800, up 14.6% year-over-year, with price gains in every region, NAR said. Like October, homes were on the market for an average of 21 days. 73% of homes sold in November were on the market for less than a month.
Robert Frick, corporate economist at Navy Federal Credit Union also said that the decrease in home sales isn’t bad news, but the increase in demand will hurt first-time and low-income homebuyers.
“A pullback in existing home sales was expected as we move into the winter, and as COVID-19 cases continue to mount,” Frick said. “Rising jobless claims and state restrictions may cause a temporary slowdown in sales similar to what we saw in the spring, and this could last for the next few months. Still, the outlook for housing remains bright for 2021. An effective vaccine, low-interest rates and the financial health of the mid- and upper-income households, who buy the most homes, will fuel demand.”