Existing Home Sales Register Largest Annual Jump in More Than 3 Years: Report

A 'For Sale' sign displayed in front of a home in Miami, Fla., on Feb. 22, 2023. Joe Raedle/Getty Images

Existing home sales in the United States are picking up momentum as prospective buyers unwillingly accept elevated mortgage rates while sellers attempt to cash in on high prices.

Based on real estate brokerage Redfin’s seasonally adjusted annual rate (SAAR) estimates, existing home sales rose 0.7 percent in November from the previous month, according to a Dec. 18 report from the company. SAAR does not reveal the exact number of homes but rather an estimate based on a calculation if the number of homes sold every month was equivalent to that of November.

According to the company, SAAR estimates the number of existing units sold in November to be 4.27 million. The 4.5 percent annual uptick was the biggest increase since July 2021.

“Home-buying activity picked up steam in recent months as election uncertainty dissipated and house hunters realized that waiting probably isn’t going to get them a significantly lower mortgage rate anytime soon,” said Redfin senior economist Elijah de la Campa.

The average weekly rate for a 30-year fixed-rate mortgage has remained above the 6 percent level for more than two years, according to data from Freddie Mac.

Last fall, rates hit their highest level in more than 20 years, which dampened home sales. This was another factor why existing home sales registered a significant gain of 4.5 percent year over year in November this year, the brokerage said.

Campa is expecting full-year 2024 sales to be roughly similar to 2023, which itself registered the weakest annual sales number since 1995. He said sales are expected to go up in 2025.

Sam Khater, chief economist at Freddie Mac, said that mortgage rates this week “crept up to a similar average as this time in 2023.”

“Homebuyers are slowly digesting these higher rates and are gradually willing to move forward with buying a home, resulting in additional purchase activity.”

Meanwhile, mortgage rates may not move down significantly next year as the Federal Reserve scaled back the expected reduction in its benchmark interest rates.

The central bank recently cut interest rates down to a range of 4.25–4.5 percent. During the September policy meeting, Fed officials projected rates to be 3.4 percent at the end of next year. In the recent December meeting, the central bank said it now expects rates to be higher, at 3.9 percent, by the end of 2025.

“The slower pace of cuts for next year really reflects both the higher inflation readings we’ve had this year, and the expectation inflation will be higher,” Fed chair Jerome Powell said during a press conference.

With Fed rates projected to be higher than expected next year, mortgage rates may also not fall to the extent previously anticipated.

Winter Sales

Amid rising existing home sales, new listings for properties have increased. For the four weeks ended Dec. 15, new listings were up 7.6 percent from a year back, the second-biggest annual gain since June, according to Redfin.

More sellers are listing their properties in hopes of cashing in on high prices and increased homebuying demand, it said.

“We’re having a busier winter than usual. I have a handful of listings ready to hit the market right after the New Year. This time last year, it was crickets,” said David Palmer, a Redfin Premier agent from the Seattle, Washington, region.

Buyers “know that if they wait to buy, mortgage rates will probably stay the same, but prices will be higher,” Palmer said.

Real estate listings website Realtor is also reporting a potential uptick in end-of-the-year sales. It attributed the higher activity to factors like recent small declines in mortgage rates and owners wanting to sell off their properties before the year ends.

Lawrence Yun, chief economist at the National Association of Realtors, said that momentum was building when it comes to home sales.

Housing inventory has grown and more buyers are entering the market, Yun said.

“Existing homeowners are capitalizing on the collective $15 trillion rise in housing equity over the past four years to look for homes better suited to their changing life circumstances,” he said.