On Thursday, according to data from the National Association of Realtors (NAR), sales of existing homes in the US in November exceeded expectations and surpassed the annual 4 million household mark for the first time in six months, indicating that buyers accepted mortgage interest rates higher than 6%.

The total number of existing home sales in the US in November was 4.15 million units, the highest level since March. It is expected to be 4.08 million units, compared to the previous value of 3.96 million units. Existing home sales rose 4.8% month-on-month in November, higher than the 3% forecast. The value before October was 3.4%. Existing home sales in the US rose 6.1% year on year in November, the biggest year-on-year increase in three years.

Sales in the US existing housing market have been sluggish for the past two years. One major reason is the so-called lockdown effect, that is, homeowners are unwilling to list and sell their homes and give up lower mortgage interest rates. Despite a rebound in existing home sales in November, sales in the US real estate market are still struggling due to high mortgage interest rates and limited inventory.

Housing prices remain high due to tight inventories, and current US housing prices make the housing market one of the hardest to afford in history. The median price of existing homes sold in November rose 4.7% year on year to 0.4061 million US dollars, setting the highest record in November in history. The year-on-year increase in November was also higher than in October, indicating an acceleration in housing price increases.

By region, the Northeast and Midwest regions saw the biggest increases in housing prices, 9.9% and 7.3%, respectively.

As US second-hand property sellers gradually accept today's high borrowing costs, existing home inventories began to rise slowly but steadily this year. Although the supply of existing homes fell in November compared to October, this is very common at this time of year, and is still significantly higher than the level of November last year.

The supply of homes for sale at the end of November was 1.33 million units, an increase of 17.7% over November last year. According to the calculation of the current sales rate, it takes about 3.8 months to consume the supply in the market, which is still lower than the 5-month inventory ratio, indicating that although inventories are generally on the rise, overall market supply is still tight.

The NAR data also shows:

• In November, 53% of homes sold took less than a month to market, compared to 59% in October. The average listing time for a home is 32 days, compared to 29 days in October.
• 18% of homes sold for a higher price than the listing price.
• First-time homebuyers have made some headway, accounting for 30% of November sales, up from 27% in October, but still slightly lower than a year ago. Historically, first-time homebuyers generally account for around 40% of the market, which indicates that many Americans are being pushed out of the market's affordability challenges.
• All-cash home purchases still account for 25% of sales.
• However, investors only accounted for 13% of sales, far lower than 18% in November last year.
• The high-end market continues to drive sales. Sales of homes priced over $1 million surged 24.5% from November last year, while sales of homes priced under 0.1 million dollars fell 24.1%.

NAR Chief Economist Lawrence Yun said:

Home sales are gaining momentum. Although interest rates on mortgages are still high, consumers are increasingly adapting to current levels, and employment opportunities are increasing.

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

Regarding the decline in the share of investors, Yun said, does this indicate that investors or people who are more concerned about the data think housing prices have peaked? Or is it some other reason why rents aren't rising anymore?

Existing home sales account for about 90% of sales in the US real estate market, calculated at the time of transfer. Contracts are usually signed a month or two before transfer, so sales data for November mainly reflects purchase decisions for October and September. Mortgage interest rates fell to their lowest point in 18 months in September, but have since soared.

Although the Federal Reserve has reduced the benchmark interest rate by a cumulative percentage point since September, mortgage interest rates remain high, double the level at the end of 2021. On Wednesday, the Federal Reserve held its last meeting of the year. Federal Reserve officials predicted that the number of interest rate cuts next year would decrease. This is driving the yield on US Treasury bonds to soar. The yield on 10-year US Treasury bonds has a high impact on mortgage interest rates.

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

Federal Reserve Chairman Powell said yesterday that activity in the US real estate industry has been weak. Housing inflation is cooling, but it is cooling less than expected.

Next Tuesday, the US government will release new home sales data for November. The data is calculated based on contract signing, which is considered a leading indicator of the US real estate market.