Lower Mortgage Rates Could Help Declining Home Sales
For the 10th consecutive month, existing-home sales have declined, according to the National Association of Realtors (NAR). In November, every sales region in the country reported both month-over-month and year-over-year declines. This level of sales activity was last seen in the country in 2020, when COVID-19 led to economic lockdowns. According to Lawrence Yun, chief economist for NAR, November’s sales declines were driven by “the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. Plus, available housing inventory remains near historic lows.” Total housing inventory in November declined 6.6% month over month but was up 2.7% from a year earlier. At the current sales pace, inventory levels would supply the market for 3.3 months, unchanged from a month earlier and up from the 2.1-month supply a year ago.
While sales might have dropped in every sales region across the country, median existing-home prices rose in every region; prices for all housing types increased 3.5% year over year in November. For the past 129 months in a row, prices have seen year-over-year increases—the longest streak on record. Of all the homes sold in November 2022, 61% were available for under 30 days. The average property remained available for sale for 24 days, up from 21 days in October and just 18 days in November 2021.
Though low inventory and high prices may create a competitive market, first-time buyers are still seeing success; in November, this group accounted for 28% of all home sales, unchanged from a month ago but up from 26% a year ago. According to the NAR “2022 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 26%—the lowest on record. All-cash sales, meanwhile, represented 26% of all sales, unchanged from October but up from 24% in November 2021. Individual investors and second-home buyers—two groups who account for many all-cash sales—were responsible for 14% of all purchases in November, down from 16% a month ago and 15% a year ago.
Lower Mortgage Rates
Buyers waiting for better conditions to enter the market may soon see some positive signs; mortgage rates have been falling over the past five weeks. According to Yun, “The average monthly mortgage payment is now almost $200 less than it was several weeks ago when interest rates reached their peak for this year.”
Regional Sales Breakdown
Northeast: Existing-home sales annual rate of 530,000; a decrease of 7% from October 2022 and 28.4% from November 2021. At $394,700, the median sales price increased 3.5% from November 2021.
Midwest: Existing-home sales annual rate of 1.02 million; a decrease of 5.6% from October 2022 and 30.6% from November 2021. At $268,600, the median sales price increased 3.9% from November 2021.
South: Existing-home sales annual rate of 1.84 million; a decrease of 7.1% from October 2022 and 35% from November 2021. At $340,100, the median sales price increased 4.4% from November 2021.
West: Existing-home sales annual rate of 700,000; a decrease of 12.5% from October 2022 and 45.7% from November 2021. At $569,800, the median sales price increased 2% from November 2021.