Americans Decide to Sell Homes as Housing Market Changes

The used homes market rebounded in November as sellers show a willingness to offload their homes amid a decline in mortgage rate that is offering opportunities for buyers and sellers who had stayed out of the market amid elevated borrowing costs for home loans.

The National Association of Realtors (NAR) said on Wednesday that used home sales jumped by nearly one percent, breaking five months of negative data, with the Midwest and Southern parts of the country showing an improvement even as the Northeast and the West continued to struggle. Transactions for single-family homes, townhomes, condominiums and co-ops hit more than 3.8 million.

The improvement in used homes adds another encouraging sign to the housing market that has struggled amid high mortgage rates and elevated prices. The existing homes was frozen as sellers had been reluctant to enter a market that might require them to replace their homes with new mortgage rates that in October had hit 8 percent.

But over the last few weeks mortgage rates have slowly been coming down and for the week ending December 15, borrowing costs for a home loan went under 7 percent.

"With the positive news about the drop in inflation, and [the Federal Reserve policymakers] projections proclaiming a pivot towards rate cuts, the 30-year fixed mortgage rate reached its lowest level since June 2023, declining to 6.83 percent," Mike Fratantoni, Mortgage Bankers Association's chief economist, said in a statement shared with Newsweek.

Analysts at NAR struck a cautious optimistic note about the market going forward.

"The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November," Lawrence Yun, NAR's chief economist, said in a statement shared with Newsweek. "A marked turn can be expected as mortgage rates have plunged in recent weeks."

The surprising increase of used home sales came in as mortgage rate began their descent at the end of October and could portend a growth in the market, Hannah Jones, an economic research analyst at realtor.com, told Newsweek.

"It kind of signals that as mortgage rates fell through November that perhaps we can expect existing home sales to climb even more," Jones said.

Prices in November shot up 4.0 percent from a year ago to $387,600, the fifth month in a row of yearly price increases, NAR data said.

Buyers picked up what was available in the market but they were still competing for fewer options.

Housing inventory trended lower as they fell by nearly 2 percent to a little over 1.1 million, which is helping to keep prices elevated.

"Home prices keep marching higher," Yun said. "Only a dramatic rise in supply will dampen price appreciation."

Realtor.com's Jones suggested that sellers will still be waiting for mortgage rates to drop even further before they can jump in the market en masse.

"I wouldn't expect to see a huge influx in supply until we see mortgage rates come down more significantly where sellers can kind of justify making a sale and having to purchase at a higher rate," she said.

Realtors are seeing an increased level of listings adding another data point that suggests that sellers may be coming out of the sidelines and entering the market again.

November saw listings on realtor.com jumped by 7.5 for the year and the rising number of sellers posting their homes for sale was increasingly becoming sustained, Jones told Newsweek.

"We're seeing that new listings, the activity, is kind of holding up though because last year saw such an intense decline and this year new listing activity a little bit more stable," Jones said. "New listing activity remains below every other year in our data history, so 2017 to 2021, new listing activity is still below those levels, but it did tick up compared to 2022 in November."