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Record mortgage rates killed existing home sales in November

On a yearly basis, existing home sales were down 35.4%

Existing home sales slid for the 10th consecutive month in November, as homebuyer demand continued to cool.

The seasonally adjusted sales rate for existing homes fell 7.7% month over month in November to a rate of 4.09 million, according to a report from the National Association of Realtors (NAR) released Wednesday.

On a yearly basis, existing home sales are down 35.4%.

“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” Lawrence Yun, NAR’s chief economist, said in a statement. “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.”

After posting some month-over-month increases earlier this year, existing home inventory fell for the fourth consecutive month in November, dropping 6.6% to 1.14 million homes, which represents 3.3 months’ supply at the current sales pace. Year over year, however, inventory is up 2.7%.

Despite the drop in inventory, the typical number of days on market for a property rose to 24 days, up from 21 in October and 18 a year ago.

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Even with mortgage rates hitting some of their highest levels in decades in November, the median existing-home sales price still posted a year-over-year increase, albeit a much smaller one compared to those we saw earlier this year. At $370,000, the median existing-home sales price was up 3.5% compared to a year ago, marking the 129th consecutive month of yearly increases, the longest streak on record.

According to Realtor.com’s Market Trends Report, largest year-over-year median list price growth occurred in Milwaukee (+38.1%), Memphis (+26.9%) and Miami (+24.8%), while Phoenix reported the highest increase in the share of homes that had prices reduced compared to last year (+28.4 percentage points), followed by Austin (+23.8 percentage points) and Denver (+21.0 percentage points).

“For most of this year, prospective home buyers have faced the dual challenges of elevated mortgage rates and limited housing inventory,” Kenny Parcell, NAR’s president, said in a statement.

However, in recent weeks, mortgage rates have declined and currently hover around 6.3%.

“The market may be thawing since mortgage rates have fallen for five straight weeks,” Yun added. “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.”

Regionally, existing home sales fell month over month in all four regions, with the greatest decline coming from the West at 12.5% to an annual pace of 700,000, which also represents a 45.7% yearly drop.

“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 said.

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