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US existing home sales fall more than expected in Nov
US HOME sales dropped more than expected in November due to an ongoing shortage of properties for sale, despite the sector receiving an overall boost from the US Federal Reserve's decision to cut interest rates this year.
The National Association of Realtors (NAR) said on Thursday that existing home sales fell 1.7 per cent to a seasonally adjusted annual rate of 5.35 million units in November. October's sales pace was downwardly revised to 5.44 million units.
The US central bank's decision to lower borrowing costs three times this year to shield the economy from slowing global growth and the US-China trade war has pushed down mortgage rates from 2018's multi-year highs.
The 30-year fixed mortgage rate has dropped more than 130 basis points since last November's peak to an average of 3.73 per cent, according to data from mortgage finance agency Freddie Mac.
Existing home sales still rose 2.7 per cent from one year ago, NAR said, the fifth straight month of year-on-year gains.
Last week, the Fed made clear it plans to leave rates unchanged for the foreseeable future.
Sales were mixed across the nation's four regions last month. They climbed 2.3 per cent in the Midwest and rose 1.4 per cent in the Northeast. In the South, they declined 3.9 per cent and fell 3.5 per cent in the West.
The housing market, which makes up about 3.1 per cent of the economy, has been lifted this year by the drop in rates, but gains have been curbed by a persistent lack of properties for sale, which has inflated prices, as well as a shortage of land and labour.
But there are some hopeful signs. A survey on Monday showed confidence among homebuilders jumped in December to the highest level since June 1999 and on Tuesday, data showed US homebuilding increased more than expected in November and permits for future home construction surged to a 12½-year high.
There were 1.64 million homes on the market last month, a decline of 5.7 per cent compared to a year ago, NAR said.
The median existing house price rose 5.4 per cent from a year ago to US$271,300 in November. It was the 93rd consecutive month of year-on-year price gains.
At November's sales pace, it would take 3.7 months to clear the current inventory, down from four months a year ago.
A supply of six to seven months is seen as a healthy balance between supply and demand. REUTERS