Despite rising interest rates, existing home sales surged in November, marking a significant increase in activity.
According to the National Association of Realtors (NAR), sales climbed 4.8% to a seasonally adjusted annual rate of 4.15 million. This represents a 6.1% increase compared to the same period last year. It was also the first time in six months that sales surpassed the four-million mark.
All major regions reported annual gains in both sales and price appreciation. On a month-to-month basis, sales rose in the South, Northeast, and Midwest, while the West remained steady.
Analysts observed that October's sales boost was driven by increased inventory. However, November’s uptick occurred under unusual circumstances, with higher interest rates and fewer homes available for sale.
The inventory of unsold existing homes dropped 2.9% from October to 1.33 million, equating to a 3.8-month supply at the current sales pace. Year-over-year, inventory was up by 17.7%.
“Momentum in home sales is gaining strength. More buyers are entering the market as the economy continues to create jobs, housing inventory grows year-over-year, and consumers adjust to mortgage rates in the 6% to 7% range,” said Lawrence Yun, NAR’s Chief Economist.
Yun noted that buyers are slowly accepting that ultra-low mortgage rates from the pandemic era are gone, and the so-called "lock-in effect" is easing. Meanwhile, a strong job market and historically low unemployment levels provide potential buyers with financial stability, even as monthly payments rise. Additionally, many homeowners are leveraging the $15 trillion increase in housing equity accumulated over the past four years to purchase homes that better suit their evolving needs.
