WASHINGTON—Sales of previously owned U.S. homes declined more than expected in November, the second drop in three months and a sign limited inventory is likely constraining would-be home buyers.
Existing-home sales fell 1.7% in November from the previous month to a seasonally adjusted annual rate of 5.35 million, the National Association of Realtors said Thursday. Economists surveyed by The Wall Street Journal expected a 0.4% decrease.
Sales were up 2.7% last month from November 2018, the fifth straight month of year-over-year gains. October sales were revised down to 5.44 million compared with an earlier estimate of 5.46 million.
A lack of sufficient housing inventory to meet buyer demand continues to be a limiting factor for the housing market, according to Jessica Lautz, the trade group’s vice president of demographics.
There was a 3.7 month-supply of homes on the market at the end of November, at the current sales pace. Limited housing stock has contributed to higher home prices this year, with the median-sales price for an existing home in November up 5.4% from the previous year to $271,300.
Inventory has been particularly limited for homes priced at the lower end, according to NAR. Sales of homes priced at $250,000 and below declined in November from the prior year, while sales priced $500,000 to $750,000 saw the strongest gains, rising 8.0% year-over-year.
“The new-home construction seems to be coming to the market, but we are still not seeing the amount of construction needed to solve the housing shortage,” said Lawrence Yun, NAR’s chief economist, in a press release.
Mortgage rates have moved higher from lows for the year seen in September, but remain low by historical standards. The average interest rate on a 30-year fixed mortgage was 3.73% as of Dec. 12, according to Freddie Mac. Meanwhile, the U.S. unemployment rate fell back to 3.5% in November, a 50-year low, and wage growth has risen. Such factors have helped lift the housing market in recent months, with recent data pointing to a firming trend. The Commerce Department reported Tuesday that housing starts, a measure of new-home construction, were up 3.2% in November from the previous month, a rise that beat economists’ expectations. The National Association of Home Builders said Monday its housing market index, which measures U.S. home-builder confidence, rose in December to its highest level since June 1999.
Joseph LaVorgna, Natixis chief economist for the Americas, said in a note to clients Tuesday that the increase in home-builder sentiment is a positive sign for the broader economy heading into 2020.
“This development should lead investors to two conclusions: One, the risk of recession has fallen even further. Two, residential construction activity should be a meaningful, positive, contributor to real [gross domestic product] growth next year,” Mr. LaVorgna said.
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