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Low interest rates and reduced inventory levels pushed sales of previously owned homes in November to their fastest pace in three years. Meanwhile, a separate report shows that home values posted their largest gain in more than six years.
The National Association of Realtors announced on Thursday that existing home sales in the United States jumped 5.9 percent last month to a seasonally adjusted annual rate of 5.04 million units, topping the median forecast of 4.87 million units in a Reuters poll. It was the fastest pace since November 2009 and higher than the downwardly revised 4.76 million in October. The annual rate of sales are also 14.5 percent higher than the 4.40 million unit rate seen in November 2011.
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Lawrence Yun, NAR chief economist, says, “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation. With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes. Areas impacted by hurricane Sandy show storm-related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas.”
Helping to boost prices and confidence in the housing market, the country’s total inventory of existing homes for sale fell 3.8 percent to 2.03 million units, representing a 4.8 month supply at the current sales pace. It is the lowest housing supply since September 2005. Meanwhile, raw unsold inventory reached its worst level since December 2001. Interest rates also aided the housing market. According to Freddie Mac, the national average rate for a conventional fixed-rate 30-year mortgage declined to a record low 3.35 percent in November, compared to nearly 4.0 percent in the same period last year.
The NAR also reports that the national median existing-home price for all housing types increased 10.1 percent to $180,600, compared to November 2011. It is the ninth consecutive monthly year-over-year price gain. Meanwhile, a separate report from real estate research firm Zillow (NASDAQ:Z) shows that home values gained 5.2 percent compared with last November, the largest annual gain since August 2006. Of the 30 largest metro areas covered by Zillow, 25 logged monthly home value gains.
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