US home sales dip for 10th straight month in ‘frozen’ market

Sales of existing homes in the United States slid for a 10th consecutive month in November, extending a record streak with mortgage rates high and inventory tight, according to industry data released Wednesday.

The US real estate sector — an interest-sensitive area — has been reeling after the central bank raised the benchmark lending rate multiple times this year to dampen soaring inflation and cool the world’s biggest economy.

The rapid rate hikes have sent borrowing costs higher, in turn pricing many buyers out of the key housing market.

Last month, sales of all types of homes and condos dropped 7.7 percent from October, the National Association of Realtors (NAR) said in its latest report.

This brought the sales pace to an annual rate of 4.1 million in November, seasonally adjusted, down 35.4 percent from a year ago, the association said.

“In essence, the residential real estate market was frozen… resembling the sales activity seen during the Covid-19 economic lockdowns in 2020,” said NAR Chief Economist Lawrence Yun in a statement.

The main reason was a quick spike in mortgage rates, battering affordability for homebuyers and lowering homeowners’ incentives to list their properties, he said.

The popular option of a 30-year fixed-rate mortgage averaged 6.3 percent as of mid-December, according to home loan finance company Freddie Mac, nearly double the rate a year ago.

Available housing inventory also “remains near historic lows,” said Yun.

But mortgage rates have been falling for five straight weeks, suggesting the market may be thawing, Yun said.

Sales could turn a corner in a month or two, he told reporters, adding that more supply is coming onto the market.

But for now, the housing market is “clearly” in recession, said Yun.

The median home price across housing types was $370,700 last month, still 3.5 percent above the same period in 2021, NAR data showed.

And all four major regions in the country recorded declines in sales.

“We expect home sales to remain under pressure through most of 2023,” said Nancy Vanden Houten of Oxford Economics, adding that the downturn she expects will likely lead to some tightening of lending standards.

Existing home sales make up 90 percent of the US real estate market.