Existing home sales fell to a six-month low in November after two straight months of gains, underscoring the underlaying weakness of the housing market recovery.
The National Association of Realtors (NAR) said on Monday existing home sales dropped 6.1 percent to an annual rate of 4.93 million units, the lowest level since May.
“Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” Lawrence Yun, NAR chief economist said. “The stock market swings in October may have impacted some consumers’ psyches and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”
Economists polled by Reuters had expected sales to fall only to a 5.20-million unit pace.
October’s sales pace was revised to 5.25 million units, down from 5.26 million units, while November’s decline may signal a weakening trend fueled by low inventories.
The housing market has struggled in the second half of 2013 in the wake of a small increase in mortgage rates, which have since pulled back from their peaks. Even with increased government involvement, which once again is artificially injecting risk into the market, it is barely propping up sales.
The National Mortgage Risk Index (NMRI) for Agency purchase loans rose in November to 11.69 percent, up from the average of 11.29 percent for the prior three months (revised). The risk indices for Fannie Mae, Freddie Mac, the FHA, and the VA all hit series highs in November
Housing has been hurt badly by slow-to-zero wage growth in the U.S. economy, as well as a shortage of properties available for sale at affordable rates and higher home prices are sidelined first-time buyers.
“Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year’s promising job growth,” said Yun. “Much faster price and rent appreciation – easily exceeding wage growth – will occur next year unless new construction picks up measurably.”
