WASHINGTON—November sales of previously owned U.S. homes edged up from a month earlier but clocked the largest annual decline in more than seven years, signaling the sputtering housing market may finish the year on a weak note.
Existing-home sales rose 1.9% in November from the previous month to a seasonally adjusted annual rate of 5.32 million, the National Association of Realtors said Wednesday. Economists surveyed by The Wall Street Journal had expected sales to notch a 5.17 million annual rate last month.
Despite the monthly rise, sales in November decreased 7.0% from a year earlier, the largest year-over-year drop since May 2011. Sales have declined annually in all but one month in 2018 so far.
This year’s sales slowdown has stemmed from growing challenges for the housing market. A shortage of homes for sale at a time when continued job and wage growth are supporting demand have contributed to a rapid run-up in home prices.
Meanwhile, mortgage rates have risen in the last year and appear to be nearing 5%, a threshold analysts say could deter many from purchasing a home. The average interest rate on a 30-year fixed-rate mortgage in November was 4.87%, up from 4.03% in January, according to Freddie Mac.
The median sale price for an existing home in November was $257,700, up 4.2% from a year earlier. There was a 3.9-months’ supply of homes on the market at the end of November, based on the current sales pace. While that’s up from a 3.5-months’ pace a year earlier, inventory is coming back on the market for higher-priced homes.
“There is still a housing shortage for affordable homes that many moderate to middle-income families will be looking for,” said Lawrence Yun, the trade group’s chief economist.
The Trump administration’s tax bill also reduced some incentives for homeownership, especially in costly coastal markets and high-tax areas, by reducing the cap for the deductibility of mortgage interest and limiting the amount of state and local taxes that can be deducted.
Purchases of previously owned homes account for the bulk of U.S. home-buying activity. The Commerce Department releases data on November new-home sales next Thursday.
In November, single-family construction, which has stagnated this year after steadily climbing throughout the expansion, dropped for the third consecutive month, according to the Commerce Department.
Analysts say builders could be taking a cautious stance because of the overall temperature of the housing market. Home-builder sentiment in December fell to its lowest level since May 2015, according to the National Association of Home Builders.
News Corp., owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.