Home Sweet Home: Existing-Home Sales Make a Comeback!

Existing-Home Sales Rebound as Prices Hold Firm in Record Territory

The U.S. housing market witnessed a modest uptick in existing-home sales in November 2024, with transaction volume rising 4.8% year-over-year, according to the latest data from the National Association of Realtors (NAR). Despite this increase, housing affordability challenges persist as median home prices remain near record highs.

• Median Sale Price: $406,100 — the highest median for any November on record and a 4.7% annual increase.
• Sales Volume: Annualized rate of 4.15 million transactions, reflecting improved market activity.
• Inventory Levels: 1.33 million units available, representing a 3.8-month supply — down from October’s 4.2 months but up from November 2023's 3.5 months.

NAR’s Chief Economist, Lawrence Yun, highlighted the resilience of homebuyers, citing job market growth and increasing market acclimatization to mortgage rates between 6% and 7%. "Home-sales momentum is building," Yun stated. "Buyers are gradually adapting to the new normal in borrowing costs as broader economic stability supports confidence."

Mortgage rates, which peaked at 8.01% in October 2023, saw a sharp decline earlier this year before settling at 6.91% as of mid-December. However, affordability remains a serious concern for many buyers as elevated home prices continue to weigh heavily.

Sales of existing homes varied widely across the United States:

• Northeast: Sales increased 8.5% month-over-month to an annualized 510,000 units, marking a 6.3% year-over-year gain.
• Midwest: Transactions rose 5.3% annually to 1 million units.
• South: The largest transaction volume at 1.87 million homes, up 3.3% year-over-year.
• West: Sales remained flat compared to October but surged 14.9% from one year prior, buoyed by high-stakes market corrections from a sluggish 2023.

Inventory showed signs of stabilization, with November levels up 17.7% from a year earlier — an encouraging recovery from the scarce supply conditions that dominated during the pandemic. The market’s supply constraint, however, remains impactful, with homes selling after an average of 32 days on the market, compared to 25 days in November 2023.

"The extreme inventory tightness witnessed earlier is over," Yun underscored, aligning rising supply with expectations of gradual rate reductions.

The median home price for November fell below June’s historical peak of $426,900 due to seasonal factors but posted its 17th consecutive month of annual growth. Regional price analysis revealed the following:

• Northeast: Median price of $475,500 — a 9.9% climb year-over-year, reflecting strong demand in urban centers.
• Midwest: $302,000, up 7.3%.
• South: $361,300, a modest 2.8% gain amid affordability-driven migrations.
• West: $628,200, maintaining the highest prices nationally with a 4% annual increase.

While interest rates may gradually ease in 2025, analysts caution that reduced borrowing costs could attract more buyers, potentially placing upward pressure on prices and perpetuating affordability issues.

Mark Hamrick, Senior Economic Analyst at Bankrate, reinforced this dynamic: "The trajectory of mortgage rates and the overall economic climate will be pivotal in shaping the housing market’s performance for the year ahead."

First-time buyers accounted for 30% of November's sales, rebounding from an all-time low of 26% in late summer. However, elevated home prices remain a significant barrier for entry-level buyers, exacerbating competition in historically high-demand regions.

The housing sector enters 2025 characterized by cautiously optimistic growth tempered by persistently high prices and sensitive affordability. With the Federal Reserve signaling a potential loosening of monetary policy, softer borrowing costs could provide relief while renewing inventory challenges for a market still acclimating to post-pandemic norms.

For real estate investors, market analysts, and industry professionals, vigilance is key as sustained inventory increases, evolving regional trends, and potential rate fluctuations shape the trajectory of U.S. housing through the next cycle.