Existing Home Sales Surge Unexpectedly in November
Contracts for existing home purchases skyrocketed unexpectedly in November, reaching their highest level in almost three years, as improving housing affordability attracts buyers, according to the National Association of Realtors (NAR).
Existing home sales increased by 3.3% in the past month, following a revised upward increase of 2.4% in October, as reported by NAR. Economists surveyed by Reuters had anticipated a 1% rise in contracts, which typically turn into sales within one or two months.
Year-over-Year Comparison
Existing home sales rose by 2.6% compared to the same period last year. The sales tracking index reached its highest level since February 2023.
“Buyer momentum is increasing. The data shows the strongest performance of the year, accounting for seasonal factors, and the best return in nearly three years, dating back to February 2023,” said Lawrence Yun, NAR’s chief economist.
“The improvement in housing affordability, driven by lower mortgage rates and wage growth outpacing home price increases, is helping buyers test the market. More inventory options compared to last year are also drawing more buyers into the market,” Yun added.
Mortgage Rates and Future Trends
Since the Federal Reserve resumed interest rate cuts in September, mortgage rates have decreased. However, it remains unclear if they will drop significantly in the coming months, as the central bank has signaled a likely pause in rate reductions.
Data from mortgage financing agency Freddie Mac showed that the most recent 30-year fixed mortgage rate stood at 6.18%, nearing its lowest level since the fall of 2024.
Key Questions and Answers
- What caused the unexpected surge in existing home sales? Improving housing affordability, driven by lower mortgage rates and faster wage growth compared to rising home prices, has encouraged buyers to enter the market.
- How have mortgage rates changed recently? The Federal Reserve’s interest rate cuts since September have led to a decrease in mortgage rates, currently at 6.18% for a 30-year fixed mortgage.
- What is the outlook for future mortgage rate trends? While rates have fallen, it is uncertain if they will continue to drop significantly due to the Federal Reserve’s signal of a potential pause in rate reductions.
