November Home Sales Surge: Lower Mortgage Rates Drive Market Boost

The housing market experienced an unexpected surge in November, with existing home sales rising more than anticipated, driven by lower mortgage rates. This positive development signals a potential turnaround in the market, as buyers and sellers alike respond to favorable conditions.

The National Association of Realtors (NAR) reported that existing home sales increased by 0.8% in November, reaching a seasonally adjusted annual rate of 3.82 million. This figure surpassed economists' expectations and marked a significant improvement from the previous month. Although sales were still 7.3% lower than the same period last year, the upward trend indicates a strengthening market.

The primary factor behind this surge in home sales is the decline in mortgage rates. After reaching a two-decade high in October, mortgage rates have since cooled off, making home purchases more affordable for buyers. According to Zillow Senior Economist Nicole Bachaud, the drop in mortgage rates and cooling inflation likely played a role in unlocking buyers who had been waiting for more affordable housing options.

The median existing-home price in November was $387,600, up 4% from November 2022. While prices remain high, the slower pace of growth may have contributed to improved affordability and boosted consumer confidence in the housing market. Additionally, the increase in new construction activity played a significant role in the November home sales boost. Zillow's November 2024 Market Report noted that new construction showed increased activity, signaling that builders were feeling more optimistic about the next few months in the housing market.



Seasonal factors and market dynamics also influenced the November home sales surge. Typically, November sees a slowdown in home sales due to colder weather and the holiday season. However, this year's surge can be attributed to the decline in mortgage rates, which made home purchases more affordable. Although the market is improving, it is not yet back to pre-pandemic levels, with existing home sales still 7.3% lower than the prior year.

In conclusion, the November home sales surge, driven by lower mortgage rates and increased new construction activity, signals a potential turnaround in the housing market. As mortgage rates continue to decline and inventory levels improve, buyers and sellers alike can expect a more favorable market in the coming months. However, it is essential to monitor the market's progress and remain aware of potential risks and challenges that may arise.