Existing-home sales fall to five-month low on lean inventories

Sales of previously owned homes declined to a five-month low in November, indicating lean inventories are holding back a residential real estate market that's been supported by low mortgage rates and job growth.

Contract closings fell 1.7% from the prior month to a 5.35 million annual rate, the National Association of Realtors said Thursday. That was slightly weaker than the median projection of 5.44 million in a Bloomberg survey of economists. The median sales price rose 5.4% from a year earlier to $271,300.

The figures contrast with a series of upbeat readings on the housing sector that have signaled conditions are continuing to improve after the 2018 slowdown. Federal Reserve interest-rate cuts have helped push mortgage rates down while strong labor-market readings have buoyed consumers and underpinned sentiment among Americans.

Daniel Acker/Bloomberg

The year-over-year advance in selling prices indicate a still-solid housing market that has left inventory of properties lean and buyers with fewer options. The number of homes available in November fell 7.3% from a year earlier to 1.64 million, a record low for the month, NAR's data showed.

The data follow other reports this week showing positive momentum across the housing market. Construction of new homes increased more than forecast in November and permits to build climbed to a 12-year high, according to government figures. The National Association of Home Builders/Wells Fargo Housing Market Index surged in December to the highest since 1999 amid stronger sales.

"America is facing a housing shortage and affordability challenges," though demand remains solid, Jessica Lautz, the NAR's vice president of demographics and behavioral insights, said at a briefing in Washington. "More inventory is needed at the lower end and price reductions may be needed at the higher end."

Forty-five percent of the homes sold in November did so in less than a month, a sign of robust demand.

Sales last month declined in the South, the nation's largest region, to an annualized 2.24 million pace, the slowest since the start of the year; purchases also declined in the West.

At the current pace, it would take 3.7 months to sell all the homes on the market, the shortest period since February, compared with 3.9 months a month earlier; Realtors see anything below five months of supply as a sign of a tight market.

First-time buyers made up 32% of sales, compared with 31% the previous month.

Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are counted when contracts are signed and will be released Thursday.