U.S. existing-home sales advance for a third consecutive month

Sales of previously owned U.S. homes increased for a third-straight month in November, indicating steady job growth and still-low mortgage rates are helping bolster demand even as inventory remains lean.

Contract closings increased 1.9% from the prior month to an annualized 6.46 million, the strongest pace since January, figures from the National Association of Realtors released on Dec. 22 showed. The median forecast in a Bloomberg survey of economists called for a 6.53 million rate.

The data suggest that demand for homes is picking up, especially at the higher end of the market, as borrowing costs remain well below pre-pandemic levels. Even so, high prices may be keeping some prospective buyers out of the market, especially those at the lower end of the income spectrum harder hit by a broader inflation surge.

First-time buyers comprised just 26% of November transactions, down from 32% a year ago and matching the lowest share since 2014, the NAR report showed.

The median selling price of an existing home rose 13.9% from a year ago to $353,900 in November, reflecting in part more sales of higher-end properties, according to NAR's data. Inventory of homes priced less than $500,000 remains tight.

"Determined buyers were able to land housing before mortgage rates rise further in the coming months," Lawrence Yun, NAR's chief economist, said in a statement. Yun said sales this year are on pace to reach 6.1 million unit, which would be the best since 2006.

"Locking in a constant and firm mortgage payment motivated many consumers who grew weary of escalating rents over the last year," he said.

Housing inventory

There were 1.11 million homes for sale last month, down 13% from a year earlier. At the current pace it would take 2.1 months to sell all the available homes on the market. Realtors see anything below five months of supply as a sign of a tight market.

"New listings are coming on to the market, but they're being snatched up quickly," Yun said in a call with reporters.

Properties remained on the market for an average of 18 days in November, compared to 21 days the same month a year ago.

All-cash sales accounted for 24% of transactions in November, while investors — who make up many of the cash sales — comprised 15% of November contract signings.

Sales of previously owned single-family homes increased 1.6% last month to a 5.75 million pace. Existing condominium and co-op sales rose 4.4% in November to 710,000. Three of four U.S. regions posted increases in November, driven by a 2.9% gain in the South and a 2.3% advance in the West. 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 based on contract signings and will be released on Dec. 24.