Existing home sales in the US edged up slightly in November, offering a glimmer of hope after months of decline. However, industry experts emphasize the long road ahead for a full recovery, still hampered by high prices and lingering effects of soaring mortgage rates.
A Sign of Recovery, or Just a Blip?
November sales rose 0.8% to an annual rate of 3.82 million, according to the National Association of Realtors (NAR). While modest, this increase broke the four-month streak of consecutive declines. Still, sales remain significantly below pre-pandemic levels.
NAR Chief Economist Lawrence Yun cautiously suggests optimism, attributing the low figures to October’s record-high mortgage rates. He predicts a “marked turn” as recent rate drops filter through the market.
Rates Falling, Recovery Still Months Away
As of December 14, the popular 30-year fixed-rate mortgage fell below 7% for the first time since August. This welcome decline, however, may take months to translate into a meaningful comeback for the housing market. Yun acknowledges the time lag between rate changes and increased buyer activity.
High Prices, Low Supply Create Roadblocks
Despite the sales uptick, existing home prices remain elevated. The median price reached $387,600 in November, a 4% increase year-over-year. Until supply dramatically increases, Yun warns, price appreciation is unlikely to slow down.
Analysts at Pantheon Macroeconomics echo this concern, highlighting the “extremely depressed” state of existing home sales and the continued dampening effect of the “huge gap” between current and pre-pandemic mortgage rates. Many homeowners with lower locked-in rates are hesitant to sell.
Even with the recent rate drop, Pantheon predicts a “slow” recovery, with a “durable” resurgence unlikely until rates fall further, possibly in the second half of 2024. Economist Kieran Clancy summarizes the outlook: “Existing home sales are past the worst, but the recovery will be long and uphill.”
Key Takeaways:
- November saw a slight increase in existing home sales, offering cautious optimism.
- The full market recovery will be slow, taking months to respond to declining mortgage rates.
- High prices and low supply remain significant challenges hindering a robust comeback.
Shayne Heffernan
