US existing home sales rose in November; supply is still scarce

Housing boom comes to Florida
FILE PHOTO: A carpenter works on building new townhouses that are still under construction while building materials are in high demand in Tampa, Florida, U.S., May 5, 2021. REUTERS / Octavio Jones

December 22, 2021

WASHINGTON (Reuters) – U.S. home sales rose for a third straight month in November, but supply remained tight, sending home prices soaring and forcing first-home buyers out.

Existing home sales rose 1.9% to a seasonally adjusted annualized rate of 6.46 million units last month, the National Association of Realtors said Wednesday. Sales increased in the most affordable Midwest and most densely populated areas in the South and West. They are unchanged in the Northeast.

Economists polled by Reuters had forecast sales rising at a pace of 6.52 million units. Home resale, which makes up the bulk of US home sales, fell 2.0% year-over-year.

Strong housing demand is being driven by both individual buyers and investors, who renovate and then resell homes to take advantage of the hot housing market. However, the supply continued to decrease, keeping house prices high.

According to government data released last week, there is a record backlog of homes that are allowed to be built but have not yet begun. Builders are grappling with labor shortages, expensive materials and delays in getting supplies.

The median current home price rose 13.9% from a year earlier to $353,900 in November. Higher prices and rising mortgage rates could cool demand somewhat next year.

According to data from mortgage finance agency Freddie Mac, the 30-year fixed rate averaged 3.12% last week, up from 3.10% the previous week.

A report from the Mortgage Bankers Association on Wednesday showed mortgage applications fell to a nearly two-year low last week as home loan applications fell 3%.

Last week, the Federal Reserve said it would end pandemic-era bond buying in March and pave the way for three rate hikes of 1/4 percentage point by the end of 2022.

There were 1.11 million previously owned homes on the market last month, down 13.3% from a year ago.

At November’s sales pace, it would take 2.1 months to run out of current inventory, down from 2.3 months a year ago. A six- to seven-month supply is considered a healthy balance between supply and demand.

Properties typically stayed on the market for 18 days last month, down from 21 a year ago. Eighty-three percent of homes are on the market in less than a month.

First-time buyers accounted for 26% of sales last month, compared with 32% a year ago. That was the lowest level since January 2014.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci) US existing home sales rose in November; supply is still scarce

Bobby Allyn

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