Home sales have declined for the third month in a row, a sign that the once-frenzied housing market is cooling as mortgage rates rise.
Sales of previously owned homes dropped 4.3 percent, to a seasonally adjusted annual rate of 4.9 million in November, from 5.12 million in October, according to a report released today by the National Association of Realtors. This is the first time in more than two years that home sales fell below year-ago levels, the NAR says.
"Overall I think it implies that demand has softened and home price appreciation is less heated now than before," says NAR's chief economist Lawrence Yun. "I think we are at a cyclical low or close to a cyclical low."
Yippee for inflation as long as it's for houses?
But don’t worry; this is not a sign that home prices will drop anytime soon, especially given the still-low inventory of homes available for sale, Yun says.
The median single-family home price was $196,200 in November, which is 9.4 percent above a year ago.
Blame rates, but don't wait
The slower pace of sales is partly attributed to rising mortgage rates but waiting for lower rates or lower home prices won't do buyers any good, Yun adds.
"Many consumers think their colleagues and friends bought homes at 3.5 percent last year, so they don't want to pay 4.5, but that's still historically low," he says. "The longer they wait, the higher rates will go."
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