US Home Sales Surge: Growing Supply Encourages Buyers

The US housing market witnessed a significant uptick in November, with home sales reaching their fastest pace since March. This surge can be attributed to a growing supply of homes, which has encouraged homebuyers to enter the market. The National Association of Realtors (NAR) reported that the median existing-home sales price decreased by 0.9% year-over-year in November 2024, marking the first annual decline since January 2012. This decrease, coupled with a 12.4% increase in the number of homes for sale compared to the same period last year, has boosted affordability and eased competition among buyers.

Interest rates and mortgage availability have also played a significant role in the surge of home sales. The 30-year fixed-rate mortgage averaged 6.9% in November, down from 7.08% in October. This decline, along with an increase in mortgage availability, has made home purchases more affordable for buyers. Additionally, the Federal Reserve's decision to pause interest rate hikes in December further boosted buyer confidence, contributing to the surge in home sales.

The shift in consumer sentiment and preferences, driven by the COVID-19 pandemic, has significantly contributed to the rise in US home sales. The desire for more space and remote work flexibility has led many urban dwellers to seek larger homes in suburban areas, increasing demand for single-family homes. This trend, coupled with a growing supply of homes due to increased construction and a reduction in inventory hoarding by investors, has resulted in a faster pace of home sales in November 2024.



The increase in housing supply has had a significant impact on home prices and affordability. According to the NAR, the median existing-home sales price in the US rose by 34% between 2012 and 2021, while the median new-home sales price increased by 27% during the same period. However, the supply of new homes has been growing, with the number of new homes for sale increasing by 50% between 2019 and 2021. This increased supply has helped to ease price pressures, with the median existing-home sales price growing at a slower pace of 12% in 2021 compared to 2020. Additionally, the increase in supply has led to an improvement in affordability, with the median new-home sales price as a percentage of median household income falling from 4.5 in 2012 to 3.8 in 2021.



Interest rates play a significant role in shaping buyer behavior in the housing market. As the Federal Reserve has maintained a cautious approach to interest rates, mortgage rates have remained relatively low, making home purchases more affordable. This, coupled with increased supply, has encouraged homebuyers to enter the market, leading to the fastest pace of home sales since March. However, volatile oil prices and the Fed's interest rate policy pose potential risks to the bull market.

The shift in supply dynamics, with an increase in new listings, has significantly impacted the demand for different types of housing. Single-family homes, particularly in the entry-level and mid-range segments, have seen a surge in demand due to their affordability and the desire for more space, fueled by remote work trends. This is evident in the 16.8% year-over-year increase in sales of existing single-family homes in November (Source: NAR). Conversely, condo sales have remained relatively flat, with a mere 0.6% year-over-year increase, indicating that buyers are prioritizing single-family homes over high-density living arrangements. This trend is likely to continue, as the supply of single-family homes remains constrained, driving up prices and encouraging more buyers to enter the market.

In conclusion, the surge in US home sales in November can be attributed to a growing supply of homes, which has encouraged homebuyers to enter the market. The decrease in median existing-home sales prices, coupled with an increase in mortgage availability and a shift in consumer preferences, has contributed to the fastest pace of home sales since March. As the housing market continues to evolve, it will be crucial to monitor the impact of interest rates, supply dynamics, and consumer sentiment on home sales and affordability.