US existing home sales edge up in November but still gloomy

Published Wed, Dec 20, 2023 · 11:30 PM

Existing home sales rise 0.8 per cent to an annual rate of 3.82 million, seasonally adjusted, according to the National Association of Realtors (NAR). PHOTO: AFP

SALES of US existing homes crept up in November, according to industry data released on Wednesday (Dec 20), though they remained at a low level as high mortgage rates weigh on activity.

Existing home sales rose 0.8 per cent to an annual rate of 3.82 million, seasonally adjusted, said the National Association of Realtors (NAR) in a statement.

But NAR chief economist Lawrence Yun sounded an optimistic note, saying that the latest weakness still reflects the situation in most of October when mortgage rates were at a two-decade high.

“A marked turn can be expected as mortgage rates have plunged in recent weeks,” Yun said.

As of Dec 14, the popular 30-year fixed-rate mortgage averaged 6.95 per cent, according to data from Freddie Mac.

The figure fell below 7 per cent for the first time since early August.

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The median price of an existing home was US$387,600 last month, up 4 per cent from the same period one year ago.

The uptick in overall sales was in line with analyst expectations even as prices remain high.

“Only a dramatic rise in supply will dampen price appreciation,” Yun added.

US 30-year mortgage rate drops to 6.83%, its lowest since June

Builders in the US are benefiting from a shortfall in listings of previously owned homes.

US housing starts unexpectedly rise to a 6-month high

As mortgage rates rise, builders have been forced to cut prices since the summer in an effort to boost affordability.

US homebuilder confidence brightens as interest rates ease

The contract rate on a 30-year fixed mortgage falls by 10 basis points to 7.07 per cent in the week ended Dec 8.

US mortgage rates fall for a fourth week to lowest since July

Existing home sales, which form the majority of the US market, remain “extremely depressed,” said analysts from Pantheon Macroeconomics in a recent note.

“The huge gap between prevailing mortgage rates and the average rate on outstanding mortgages continues to keep a lid on activity,” Pantheon added.

While the drop in rates could encourage home sales to rise in the coming months, Pantheon expects “a durable recovery cannot start until rates fall much further, likely in the second half of next year.” AFP

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