The latest data from the National Association of Realtors (NAR) reveals significant momentum in the U.S. housing market, with previously owned home sales rising by 4.8% in November compared to October. This increase brings the seasonally adjusted annualized rate to approximately 4.15 million units, marking not only a monthly boost but also a 6.1% year-over-year rise. Notably, this surge represents the third-highest sales pace of the year, indicating a robust recovery from the fluctuations experienced in previous months. As more buyers enter the market, fueled by job growth and a relative easing of inventory pressure, the dynamics of home buying appear to be shifting favorably.
Interestingly, the rise in sales follows a period of fluctuating mortgage rates. After falling to an 18-month low in September, mortgage rates sharply increased in October. Despite this volatility, Lawrence Yun, the chief economist of the NAR, notes that many consumers have adapted to a “new normal” of mortgage rates stabilizing around the 6% to 7% mark. This adjustment has seemingly encouraged more homebuyers to take the plunge into the market. Moreover, a substantial inventory increase, now at 1.33 million units—a 17.7% rise from the previous November—has contributed to this renewed interest. With current sales levels, this equates to a supply of approximately 3.8 months, well below the balanced market threshold of six months.
Despite the uptick in sales volume, the constrained supply continues to apply upward pressure on housing prices. The median sales price in November reached $406,100, reflecting a notable 4.7% increase year-over-year. Notably, regions like the Northeast and Midwest experienced the most substantial price increases, with gains of 9.9% and 7.3%, respectively. Particularly alarming to potential buyers is the fact that nearly 18% of homes sold in November went for prices above their initial listings. While first-time homebuyers constituted 30% of sales—an increase from 27% in October—the competition in the market remains fierce.
The ongoing trend of cash sales indicates that liquidity remains a critical factor within the housing market. Cash transactions accounted for a commanding 25% of home sales, though there has been a discernible decline in investor activity—now just 13% of sales, down from 18% the year prior. The drop in investor presence raises questions about potential market overheating, as Yun pointedly questions whether this reflects a belief that home prices have peaked or suggests a shift caused by stagnating rental prices.
Curiously, the most significant sales gains have been concentrated in the luxury segment of the market. Homes priced over $1 million witnessed a substantial 24.5% increase, contrasting sharply with the 24.1% drop observed in the sub-$100,000 category. As mortgage rates experienced another uptick following a recent Federal Reserve meeting, market analysts are now anticipating fewer rate cuts next year, which could further complicate affordability for buyers. As the real estate landscape continues to evolve, it will be essential to monitor these trends closely, particularly how shifting rates will impact buyer confidence and overall market stability in the coming months.