U.S. existing home sales fall more than expected in November
By Lucia Mutikani
WASHINGTON (Reuters) - US home sales declined more than expected in November for five consecutive months of growth due to a lack of housing and more expensive homes. However, the real estate market continues to be supported by the lowest mortgage rates.
The National Association of Realtors said Tuesday that existing home sales fell 2.5% last month to a seasonally adjusted annual rate of 6.69 million units. Economists polled by Reuters forecast a 1.0% drop in sales to 6.70 million units in November.
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Existing home sales, which make up the bulk of US home sales, were up 25.8% year over year in November.
Sales declined in the South, Midwest and Northeast. They were flat in the west.
The real estate market has been the star of the economy thanks to pent-up demand and historically low mortgage rates. The COVID-19 pandemic has employed 21.8% of the workforce from home. This has resulted in migration from city centers to suburbs and other sparse areas as Americans seek spacious accommodations for home offices and schools.
The coronavirus recession that started in February hit low-wage workers disproportionately.
The 30-year fixed mortgage rate averages 2.67 percent, according to the Freddie Mac mortgage finance agency. This is the lowest rate since the agency began collecting data in 1971.
Housing supply has failed to keep pace with demand and has put property prices out of reach for many first-time buyers, even though builders are pushing construction. The government reported last week that single-family home construction, the largest share of the housing market, rose in November to its highest level since April 2007.
In November, 1.28 million owner-occupied homes were on the market, a record low and a 22% year-over-year decline. The median price for existing homes rose 14.6% year over year to $ 310,800 in November. Sales were concentrated in the upper price segment of the market.
Federal Reserve Chairman Jerome Powell said last week, despite the Federal Reserve's monitoring of house prices and the prices of other assets, "From a financial stability perspective, house prices are not a concern right now." Powell said the higher prices "only reflected great demand".
At the sales pace in November, it would take a record low of 2.3 months for current inventory to run out. A supply of six to seven months is considered a healthy balance between supply and demand.
(Reporting by Lucia Mutikani; Editing by Dan Burns)
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