Sales of existing homes fell severely in November, but prices remained elevated compared to one year ago as demand for housing continued to outpace historically low inventory, according to the National Association of Realtors (NAR) Wednesday.
On a monthly basis, sales declined by 7.7% in November compared to October, and were down 35.4% compared to November, 2021, the NAR reported. Although November was the tenth straight month of flagging sales, the median existing home sales price was still up 3.5% compared to November 2021, at $370,700, as the inventory of unsold homes fell to 1.14 million, down 6.6% from October 2022.
“While home price deceleration will continue next year, prices will keep annual appreciation flat throughout 2023, with half of the areas across the country experiencing small price gains and the other half seeing small price declines,” Nadia Evangelou, director of Real Estate Research at the NAR told the Daily Caller News Foundation. “Generally, higher mortgage rates make prices cool. However, home prices are still higher than a year ago. Even though there are significantly fewer buyers in the market, demand continues to outpace housing supply. Put simply, there are just not enough homes to allow prices to drop.”
First-time buyers were responsible for 28% of sales in November; Individual investors purchased 14% of homes; All-cash sales accounted for 26% of transactions; Distressed sales represented 2% of sales; Properties typically remained on the market for 24 days. #NAREHS pic.twitter.com/ydotOERUwC
— NAR Research (@NAR_Research) December 21, 2022
The housing market was essentially “frozen” in November, and resembled the market during the COVID-19-inspired lockdowns of 2020, NAR Chief Economist Lawrence Yun said in a press release. Elevated mortgage rates — which passed 7% in early November — made houses less affordable, incentivizing homeowners not to sell, in turn contributing to the historically low supply of houses that is propping up prices, according to Yun.
Thirty-year fixed-rate mortgages have since fallen, to 6.31% for the week ending Dec. 15, but remain heavily elevated compared to 2020 and 2021, when rates hovered near 3% according to Freddie Mac. The Federal Reserve’s aggressive campaign of interest rate hikes beginning in March, designed to blunt demand and reduce inflation, is largely responsible for driving up mortgage rates this year.
As mortgage rates declined, demand to refinance mortgages jumped 6% in the week ending Dec. 16, compared to the week prior, but remained roughly 85% lower than the same week last year, according to the Mortgage Bankers Association Wednesday.
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