WASHINGTON, Dec.22 (Reuters) – U.S. home sales rose for the third consecutive month in November, but supply remained tight, keeping house prices high and crowding out first-time buyers.
Existing home sales rose 1.9% to a seasonally adjusted annual rate of 6.46 million units last month, the National Association of Realtors said on Wednesday. Sales increased in the more affordable Midwestern region and in the densely populated South and West. They remained unchanged in the Northeast.
Economists polled by Reuters expected sales to increase to 6.52 million units. Home resales, which account for the bulk of US home sales, fell 2.0% year-on-year.
Strong housing demand is driven by both individual buyers and investors, who renovate and then resell homes to take advantage of the booming housing market. But supply continued to lag, keeping house prices high.
There is a record backlog of homes approved for construction but not yet started, according to government data released last week. Builders are grappling with labor shortages, expensive materials and supply delays.
The median price of existing homes rose 13.9% from the previous year to $ 353,900 in November. Rising prices and rising mortgage rates could dampen demand somewhat next year.
The 30-year fixed-rate mortgage was on average 3.12% last week, down from 3.10% the week before, according to data from mortgage finance agency Freddie Mac.
A Mortgage Bankers Association report released on Wednesday showed the volume of mortgage applications hit their lowest level in nearly two years last week due to a 3% drop in loan applications for purchase of a house.
The Federal Reserve said last week it would end its bond purchases during the pandemic in March and pave the way for interest rate hikes of three-quarters of a percentage point by the end of 2022 .
There were 1.11 million previously owned homes on the market last month, down 13.3% from a year ago.
At the pace of November sales, it would take 2.1 months to deplete current stocks, down from 2.3 months a year ago. A six to seven month supply is seen as a healthy balance between supply and demand.
Properties typically remained on the market for 18 days last month, up from 21 days a year ago. Eighty-three percent of homes sold had been on the market for less than a month.
First-time buyers accounted for 26% of sales last month, up from 32% a year ago. This is the lowest level since January 2014. (Report by Lucia Mutikani; edited by Andrea Ricci)