Sales of previously owned U.S. homes unexpectedly increased in November to the strongest level since early 2007, ahead of a jump in borrowing costs, National Association of Realtors data showed.
Contract closings rose 0.7% to a 5.61 million annual rate, beating the forecast of 5.50 million. That was the fastest pace since February 2007. Sales increased 18.2% year-over-year on an unadjusted basis, when changes in mortgage regulations delayed closings. The median sales price climbed 6.8% from November 2015 to $234,900. The inventory of available properties dropped 9.3% from November 2015 to 1.85 million, marking the 18th consecutive year-over-year decline.
Sales have kept chugging along in the industry’s quieter selling season, buoyed by consistent job gains as well as increases in consumer and business optimism reflecting expectations that President-elect Donald Trump will relax burdensome regulations. But mortgage rates reaching two-year highs could make it difficult for some borrowers to qualify for a loan, while limited inventory, partly due to scarcities of skilled labor and available lots in the new-home market, keeps property prices elevated.
“People who had locked in their rate” followed through with their purchases last month, Lawrence Yun, NAR chief economist said. Still, “we have this inventory shortage, this housing shortage, for the past five years, hurting affordability for first-time buyers,” he continued.
Existing home sales picked up in two of four regions, including an 8% gain in the Northeast and a 1.4% advance in the South.
At the current pace, it would take four months to sell the houses on the market, the shortest span since January; anything less than a five months’ supply is considered a tight market.
Single-family home sales decreased 0.4% to an annual rate of 4.95 million Purchases of condominium and co-op units climbed 10% to a 660,000 pace, the fastest since May 2007.
First-time buyers accounted for 32% of all sales, compared with 33% in the prior month. Homes sold in 43 days, down from 54 days a year earlier, with 42% of homes sold in November were on market for less than a month.