Existing home sales fell 4.3% in November but as higher interest rates and tight inventory dampened the market, the National Association of Realtors said Thursday.
Sales dropped for the third straight month to a seasonally adjusted annual rate of 4.9 million from 5.12 million in October.
That was 1.2% off the November 2012 pace and the first time in 29 months that sales were below year ago levels.
Economists’ median forecast was for a November rate of 5.1 million, according to a survey by Action Economics.
Home sales are being hurt by higher mortgage interest rates, limited inventory and tight credit, says Lawrence Yun, NAR chief economist.
The national median existing price was $196,300 in November, up 9.4% from the year before.
Distressed homes accounted for 14% of November sales, unchanged from October.
Inventory expanded to a 5.1 month supply, up from 4.9 months in October. That means all homes would be sold in that time frame at the current sales rate. A six or seven month supply is a balanced market.
In November, the inventory of existing homes for sale was 5% above a year ago, NAR says. The supply of homes for sale is up 8.4% from when it bottomed in January, on a seasonally adjusted basis, says Jed Kolko, Trulia economist.
More homes for sale mean buyers have more choices, which may lead to lower price gains going forward.
The report comes a day after a strong showing for November housing starts and the Federal Reserve’s announcement that it will trim its bond buying starting next month.
The Fed’s tapering, which was expected, will likely drive mortgage interest rates higher. That’ll be “a tough reality check for many homebuyers,” says Ellen Haberle, economist for real estate brokerage Redfin.