On Thursday, according to data from the National Association of Realtors (NAR) in the USA, the sales of existing homes in November exceeded expectations, surpassing an annualized rate of 4 million units for the first time in six months, indicating that homebuyers are accepting mortgage loan rates higher than 6%.

In November, the total sales of existing homes in the USA reached an annualized 4.15 million units, the highest level since March, compared to an expectation of 4.08 million units and a previous value of 3.96 million units. The month-on-month sales of existing homes in November increased by 4.8%, exceeding the expected 3%, while the previous month in October was at 3.4%. Year-on-year, the sales of existing homes in the USA rose by 6.1%, marking the largest increase in three years.

Over the past two years, the sales in the USA's existing home market have been sluggish. One main reason is the so-called lock-in effect, where homeowners are reluctant to list their homes for sale and give up their lower mortgage loan rates. Despite the rebound in home sales in November, the sales in the USA's real estate market remain in distress due to high mortgage loan rates and limited inventory.

The tight inventory has led to high housing prices, making the current housing market in the USA one of the least affordable in history. The median home price for existing homes in November rose by 4.7% year-on-year to $406,100, setting a record high for November. The year-on-year increase in November also exceeded that of October, indicating an acceleration in price growth.

Regionally, the largest price increases were observed in the Northeast and Midwest, with increases of 9.9% and 7.3% year-on-year, respectively.

As sellers of existing homes in the USA gradually accept the current high borrowing costs, the inventory of existing homes has started to slowly but steadily rise this year. Although the supply of existing homes in November was lower than in October, this is quite common at this time of year and still significantly higher than the levels seen in November last year.

At the end of November, the supply of unsold homes was 1.33 million units, an increase of 17.7% compared to November last year. Based on the current sales pace, it would take about 3.8 months to consume the existing supply in the market, which is still below the 5-month sales-to-inventory ratio, indicating that although inventory is generally on the rise, the overall market supply remains tight.

NAR's data also shows:

• In November, 53% of the sold homes were on the market for less than a month, while this proportion was 59% in October. The average listing time for homes was 32 days, compared to 29 days in October.
• 18% of homes sold for more than the listing price.
• First-time homebuyers made some progress, accounting for 30% of November sales, up from 27% in October, but still slightly below a year ago. Historically, first-time homebuyers typically make up about 40% of the market, indicating that many Americans are being squeezed out of the market by affordability challenges.
• All-cash purchases still account for 25% of sales.
• However, the sales from investors only accounted for 13%, far lower than 18% in November last year.
• The high-end market continues to drive sales. The sales of homes priced over 1 million dollars soared by 24.5% compared to November last year, while sales of homes priced under 100,000 dollars dropped by 24.1%.

NAR's Chief Economist Lawrence Yun stated:

The momentum in home sales is strengthening. Despite high mortgage rates, consumers are becoming more accustomed to the current levels, and there are also increasing job opportunities.

However, the annual sales of existing homes in 2024 are likely to be lower than last year, which was already the worst year since 1995.

Regarding the decrease in the proportion of investors, Yun expressed whether this indicates that investors or data-focused individuals believe that home prices have peaked? Or is it due to other reasons, like rent no longer increasing?

Existing home sales account for about 90% of the USA Real Estate market sales volume, calculated at the time of transfer. Contracts are usually signed one to two months prior to the transfer, so November's sales data mainly reflects purchasing decisions made in October and September. Mortgage rates dropped to an 18-month low in September but have since surged.

Although the Federal Reserve has cumulatively lowered the benchmark interest rate by one percentage point since September, mortgage rates remain high, at double the levels seen at the end of 2021. On Wednesday, the Federal Reserve held its last meeting of the year, where officials predicted that the number of interest rate cuts next year would be reduced, driving up USA Treasury yields, with the 10-year Treasury yield significantly impacting mortgage rates.

The Mortgage Bankers Association (MBA) expects that mortgage rates will remain above 6% for at least the next two years. According to MBA data, for the week ending December 13, the financing cost for a 30-year fixed-rate mortgage was 6.75%.

Federal Reserve Chairman Powell stated yesterday that activity in the USA Real Estate Industry has been weak. Housing inflation is cooling down, but the pace of cooling is slower than expected.

Next Tuesday, the USA government will release the November new home sales data, which is calculated based on the signing of contracts and is considered a leading Indicator for the USA Real Estate market.