Sales of US existing homes crept up in November, according to industry data released Wednesday, though they remained at a low level as high mortgage rates weigh on activity.
Existing home sales rose 0.8 percent to an annual rate of 3.82 million, seasonally adjusted, said the National Association of Realtors (NAR) in a statement.
But NAR chief economist Lawrence Yun sounded an optimistic note, saying that the persistently low sales figures reflect the situation in most of October when mortgage rates were at a two-decade high.
“A marked turn can be expected as mortgage rates have plunged in recent weeks,” Yun said.
As of December 14, the popular 30-year fixed-rate mortgage averaged 6.95 percent, according to data from Freddie Mac.
The figure fell below 7.0 percent for the first time since early August.
It may take several months before a meaningful recovery however, Yun said, noting the time needed for home purchases and for buyers to return to the market.
The median price of an existing home was $387,600 last month, up 4.0 percent from the same period a year ago.
The uptick in overall sales was in line with analyst expectations even as prices remain high.
“Only a dramatic rise in supply will dampen price appreciation,” Yun added.
Existing home sales, which form the majority of the US market, remain “extremely depressed,” said analysts from Pantheon Macroeconomics in a recent note.
“The huge gap between prevailing mortgage rates and the average rate on outstanding mortgages continues to keep a lid on activity,” Pantheon added.
Homeowners have been reluctant to put their properties on sale after having locked in lower mortgage rates before.
While the drop in rates could encourage home sales to rise in the coming months, Pantheon expects “a durable recovery cannot start until rates fall much further, likely in the second half of next year.”
“Existing home sales are past the worst, but the recovery will be slow,” said economist Kieran Clancy of Pantheon Macroeconomics.
