U.S. existing home sales slumped to a 2-1/2 year low in November as the housing market continued to be squeezed by higher mortgage rates
Existing home sales plunged 7.7% to a seasonally adjusted annual rate of 4.09 million units last month, the lowest level since May 2020, the National Association of Realtors said on Wednesday. Outside the plunge during the first wave of the COVID-19 pandemic in the spring of 2020, this was the lowest level since November 2010.
The Federal Reserve's fastest interest rate-hiking cycle since the 1980s has had the most impact on housing. The U.S. central bank is seeking to slow unacceptably high inflation by bringing down demand for everything from housing to labor. The average rate on a 30-year fixed-rate mortgage surged to above 7% a few months ago, the highest since 2002, according to data from mortgage finance agency Freddie Mac. Though the rate has since retreated to 6.31% last week, it is double what it was that time a year ago.
There were 1.14 million previously owned homes on the market, up 2.7% from a year ago. At November's sales pace, it would take 3.3 months to exhaust the current inventory of existing homes, up from 2.1 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
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