U.S. Existing Home Sales (November 2024)

U.S. existing home sales rise for the second consecutive month in November 

• Existing home sales rose 4.8% month-on-month (m/m) to 4.15 million units (annualized) in November, coming in slightly above market expectations for a 3.2% gain. Sales are up 6.1% from a year ago.  
• Sales gains were broad based across segments, with single-family home sales up 5.0%, and sales in the smaller condo/co-op segment up 2.6%. 
• Activity improved across most Census regions, with sales rising 8.5% (m/m) in the Northeast, 5.6% in the South and 5.3% in the Midwest. Sales held flat at 770k in the West Census region. 
• Total housing inventory at the end of November was 1.33 million units (non-seasonally adjusted), down 2.9% from October but up 17.7% from one year ago (1.13 million). Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 3.9 months' supply – down slightly from 4.0 months in October but up from 3.5 months in November 2023. This latter measure has remained on the cusp of balanced territory (typically between 4 and 6 months) over the last four months.
• House prices gained further momentum, rising to 4.7% from a year ago, an increase from 3.9% (y/y) in the month prior. On a seasonally adjusted basis, median home prices rose 1% m/m, building on a 0.8% gain in the month prior (seasonal adjustment performed by TD Economics).

Key Implications

• The decline in mortgage rates in early autumn to a little over 6% looks to have fuelled a second monthly gain in existing home sales, with the uptick in November reflecting contracts that were signed 1-2 months prior. Housing inventories showed an improvement from a year ago, but the market is still only on the cusp of balanced territory. Amidst this backdrop, homebuyers appear to have leaned into the more favorable financing rates and bid up prices, with home price growth reversing course and trending higher over the last few months.
• The interest rate backdrop has shifted significantly over the last several weeks. Mortgage rates have U-turned higher and, following signals of a reduced pace of Fed rate cuts next year, are now back above 7%. We expect the recent positive sales momentum to dissipate in early-2025. But, as mortgage rates likely drift lower once again next year – a trend we anticipate will be more pronounced around mid-2025 – home sales should resume their upward path (see our recent housing report here). Still, if the Fed's revised outlook of only two rate cuts next year comes to pass, the expected improvement will be more moderate than we currently anticipate. 

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