U.S. Home Sales See Biggest Annual Decline at Least a Decade

There were 35.1% fewer deals last month than in November 2021.

U.S. home sales plummeted 35.1% in November, the biggest annual decline in at least 10 years, according to a Redfin report Thursday.

Meanwhile, home price growth has also slowed, with an incremental 2.6% year-over-year rise last month, the data showed. That's the smallest gain since May 2020, when the Covid-19 pandemic was at its worst.

Interest rates rose to more than 7% in November, which has stalled buyers, the report said. That, in turn, has kept would-be sellers from listing their properties-which may not fetch the desired price.

Indeed, new listings were down 28.4% last month compared to November 2021, the second largest decline on record (the biggest was in April 2020), the report said. However, overall supply increased 4.6% annually as homes lingered on the market, with a typical home taking 37 days to go under contract, up from 23 days last year.

"The worst of inflation is likely in the rearview mirror," Chen Zhao, Redfin's economics research lead, said in the report. "We do anticipate that mortgage rates will decline slightly further in 2023 as the Fed's actions continue to bring inflation down, which should ultimately bring more home buyers back to the market. Still, we have a ways to go until we reach recovery mode, and we may see sales continue to ebb in the short term."

There are "early signs" that demand may increase as rates continue to fall.

"There was a slight downtick in the portion of home-purchase agreements that were canceled in November, and mortgage applications and Redfin's Homebuyer Demand Index have both been on the rise," the report said. "Still, these early indicators haven't translated into more home sales."

Regionally, existing-home sales slumped the least in the Northeast, according to a separate report from the National Association of Realtors released Wednesday. Deals were down 28.4% last year, and the median price was $340,100,, up 4.4% annually.

In the Midwest, existing-home sales were down 30.6% compared to last year, while the median price was $394,700, up 3.5% annually, the report said. The South saw home sales decrease 35% annually, with the median price being $268,600, an increase of 3.9% from this time last year.

"The West region experienced the largest decline in home sales and the smallest increase in home prices compared to the other regions of the country," NAR Chief Economist Lawrence Yun said in the report.

Indeed, existing-home sales in the region fell a whopping 45.7% compared to last year, the report said. The median price was $569,800, a 2% annual increase.

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