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After five months of declines, existing-home sales increased in November, according to the National Association of Realtors (NAR). While all four sales regions in the country experienced year-over-year sales declines, two regions—the Midwest and the South—saw month-over-month sales climb.
Declining Mortgage Rates Create Opportunity
Lawrence Yun, chief economist for the NAR, expects a marked turn in the coming months as mortgage rates plunge. "The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November." According to Freddie Mac, the 30-year fixed-rate mortgage dropped below 7% for the first time since August. Lower mortgage rates will shift the market in favor of those readying to sell.
Low Inventory Fueling Competition
By the end of November, total housing inventory sat at 1.13 million units, down 1.7% from a month ago but up 0.9% from a year ago. At the current sales pace, this inventory level would supply the market for 3.5 months. With such a low supply of homes, the current market is favoring sellers, as competition among buyers for the few homes available may increase demand and prices.
The Benefit of High Prices
In November, the median existing-home price for all housing types reached $387,600; this was up 4% from a year earlier. What’s more, every sales region in the country recorded price gains. Sellers are benefiting from the high home prices, and according to Yun, "only a dramatic rise in supply will dampen price appreciation." Under the current market conditions, those readying to sell are in an ideal position.
Market Still Favors Sellers
According to the monthly REALTORS Confidence Index, the average property remained available for sale for 25 days in November, up from 23 days in October and 24 days in November 2022. Of all the homes sold, 62% were available for less than one month. First-time buyers remain active in the market, accounting for 31% of all transactions in November. This is up from 28% both a month ago and a year ago. The NAR "2023 Profile of Home Buyers and Sellers" revealed that first-time buyers represented 32% of all buyers. All-cash sales, meanwhile, accounted for 27% of all purchases in November, down from 29% a month ago but up from 26% a year ago. Individual investors and second-home buyers—groups responsible for most all-cash sales—represented 18% of all buyers, up from 15% in October and 14% in November 2022. With homes selling quickly and a diverse pool of potential buyers, the current market seems to be favoring sellers.
Regional Sales Breakdown
Northeast - Existing-home sales annual rate of 470,000; a decrease of 2.1% from October 2023 and 13% from November 2022. The median sales price of $428,600 represented a 4.8% increase from November 2022.
Midwest - Existing-home sales annual rate of 940,000; an increase of 1.1% from October 2023 but a decrease of 8.7% from November 2022. The median sales price of $280,800 represented a 4.9% increase from November 2022.
South - Existing-home sales annual rate of 1.77 million; an increase of 4.7% from October 2023 but a decrease of 4.3% from November 2022. The median sales price of $351,500 represented a 3.4% increase from November 2022.
West - Existing-home sales annual rate of 640,000; a decrease of 7.2% from October 2023 and 8.6% from November 2022. The median sales price of $603,200 represented a 5.3% increase from November 2022.
