U.S. Existing Home Sales Surge to Eight-Month High in November

WASHINGTON (Reuters) – In November, U.S. existing home sales reached an eight-month high, although rising mortgage rates and house prices remain problematic going into 2025.

Home sales increased by 4.8% from the previous month to a seasonally adjusted annual rate of 4.15 million units, the highest since March, according to the National Association of Realtors. Economists surveyed by Reuters had predicted sales would rise to a rate of 4.07 million units.

This marks the second consecutive monthly increase in sales since they hit a 14-year low in September. Year-over-year, sales rose by 6.1%, the most significant jump since June 2021. Despite these gains, the outlook for the housing market next year is tempered.

The Federal Reserve recently implemented its third consecutive interest rate cut, projecting only two reductions in borrowing costs for next year, down from four anticipated in September, reflecting the economy’s ongoing strength.

Uncertainties related to President-elect Donald Trump’s policies are also affecting market forecasts. There are worries that proposed tariffs, tax cuts, and immigration policies could be inflationary. This speculation, alongside economic resilience, has influenced the yield on the 10-year U.S. Treasury note—an indicator for mortgage rates.

Bank of America Securities forecasts that the average rate on the 30-year fixed mortgage may rise to between 6% and 6.5% next year, which could deter homeowners from selling, thus keeping supply constrained and house prices high. Many homeowners currently have mortgage rates below 5%.

Additionally, high lumber prices due to tariffs and a worker shortage linked to immigration policies would complicate new housing construction efforts.

“Home sales momentum is building,” stated Lawrence Yun, the NAR’s chief economist. “More buyers have entered the market as jobs continue to grow.”

Inventory dropped by 2.9% to 1.33 million units last month, despite a year-over-year increase of 17.7%. The median home price saw a 4.7% rise from last year to $406,100 in November, with price increases noted across all four regions.

At the current sales rate, it would take 3.8 months to deplete the existing home inventory, compared to 3.5 months a year prior. A balanced market operates between a four-to-seven-month supply.

Properties averaged 32 days on the market in November, up from 25 days last year. First-time buyers made up 30% of sales, a slight decrease from 31% last year and below the 40% marker economists consider essential for a healthy market.

All-cash sales accounted for 25% of transactions, down from 27% last year, while distressed sales, including foreclosures, remained stable at 2%.