November's existing-home sales dip amid steady price gains

Though median home prices continued their steady growth trajectory, existing-home sales dipped in November by 4.3%, according to the National Association of Realtors. This marks the first time in 29 months that sales fell below year-ago levels.

Total existing-home sales came in at a seasonally adjusted annual rate of 4.90 million, down from 5.12 million in October and also 1.2% lower than November 2012's 4.96 million.

Single-family home sales were down 3.8% to a seasonally adjusted annual rate of 4.32 million, compared to 4.49 million in October. This is 0.9% below year-ago levels. 

Meanwhile, the national median existing-home price was $196,300, a 9.4% increase year-over-year; the median single-family home price was close behind at $196,200. Part of this price growth owes to a smaller share of distressed home sales, which accounted for 22% of sales in 2012 but only 14% last month.

“Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit,” said NAR chief economist Lawrence Yun. “There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years.”

Also contributing to price gains is a decrease in total housing inventory, which declined 0.9% in November to 2.09 million existing homes available for sale, representing a 5.1-month supply. However, October's inventory-to-sales-pace ratio only accounted for a 4.9-month supply.

NAR president Steve Brown added that the incumbent new rules regarding the Qualified Mortgage will have a restraining effect on the number of people who will be able to secure mortgages next year.

"Qualified borrowers are getting a loan that they are very likely to be able to repay, but some borrowers may wind up paying much more for their mortgage, or not get a loan at all due to the tougher standards,” Brown said. “The new rules may tighten credit too much, but we’re hopeful regulators will make adjustments if this proves to be true.”