Existing home sales saw their biggest jump in over three years, driven by buyers adapting to higher mortgage rates and increased inventory.
Sales of existing homes registered their highest gain in more than three years for the second consecutive month as buyers are returning to the market as they adapt to a new normal of elevated rates. The National Association of Realtors reported on Thursday that home sales increased 4.8% in November compared to the previous month. Compared to a year ago, sales grew 6.1%, the highest jump since June 2021.
The existing home market posted a gain in a year that has been projected to be the slowest since 1995. NAR Chief Economist Lawrence Yun said, 'Home sales momentum is building.' 'More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers become accustomed to a new normal of mortgage rates between 6% and 7%.' The outlook for 2025 is uncertain with expectations that the Fed will maintain its rates higher for longer than initially anticipated due to persistent inflation and uncertainties surrounding President-elect Donald Trump’s tariffs, tax cuts, and plans for a mass deportation campaign, all of which have concerned economists regarding their impact on prices. Mortgage rates have had a significant influence on the market since they surpassed 7% as bond yields increased, discouraging more buyers from entering the market as they await a decline in rates. Buying activity has surged when rates dip towards 6%, including last month when existing home sales recorded their first gain in more than three years. Obtaining a lower mortgage rate is particularly crucial for buyers in a market facing affordability challenges. Listing prices have steadily climbed since the pandemic housing boom and have shown minimal signs of decreasing, with a limited supply of homes available. The median existing home price in November was $406,100, a 4.7% increase compared to a year ago. While there are few indications that prices will drop, there is some optimism that they may moderate towards historical norms of around 2% with improved market conditions
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