US home sales fell nearly 8% last month, posting their longest streak of declines in 23 years
- Existing home sales have fallen for 10 consecutive months, the longest slump since 1999, according to data from NAR.
- That's a sign rising rates are weighing on the housing market, with the average rate for a 30-year mortgage surpassing 7% earlier this year.
Sales of existing homes have now dropped for 10 straight months, according to data from the National Association of Realtors, marking the longest losing streak since 1999.
November's annualized sales pace of 4.09 million was down 7.7% from October and 35.4% compared from the previous year, NAR said Wednesday.
"The residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020," NAR chief economist Lawrence Yun said. "The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes."
Mortgage rates skyrocketed past 7% earlier this year amid the Fed's rate hikes, with central bankers raising benchmark interest rates 425-basis-points to tackle inflation.
Home sales have also been hurt due to housing inventory being near a record low, as current homeowners are clinging onto the low interest rates that financed mortgages in previous years. Total housing inventory dipped to 1.14 million units in November, down 6.6% from the previous month.
But activity in the sector could be set to improve, Yun said. Mortgage rates have fallen in recent weeks as the Fed began easing up on rate hikes this month, with the average rate for a 30-year fixed mortgage now hovering around 6.52%, according to Bankrate.
"The market may be thawing since mortgage rates have fallen for five straight weeks," Yun added.
Other markets experts are wary, as the Federal Reserve has signaled it would keep interest rates high throughout 2023 and continue hiking, meaning there could be more demand destruction.
If the Fed keeps raising rates, it could spur a recession and spark chaos in financial markets, according to billionaire investor Bill Gross, warning that housing was particularly vulnerable.