WASHINGTON - Americans bought homes in November in the fastest pace in nearly a decade. But rising mortgage rates, a deepening shortage of houses and higher prices are likely to weigh on the market next year.
The National Association of Realtors said Wednesday that sales of existing homes rose 0.7 percent last month to a seasonally adjusted annual rate of 5.61 million. That was up from a downwardly revised 5.57 million in October and the highest since sales hit a 5.79 million pace in February 2007. Sales were up 15 percent from a year earlier.
Sales rose 8 percent in the Northeast and 1.4 percent in the South, but fell in the West and Midwest.
Fewer than 1.9 million homes were on the market, down 9 percent from a year earlier. The tight supply pushed the median price to $234,900 last month, up 6.8 percent from a year ago.
The Commerce Department reported Friday that housing starts fell 18.7 percent last month to a seasonally adjusted 1.09 million.
“We have a housing shortage,” said Lawrence Yun, the Realtors’ chief economist. “We are not building enough housing.”
At the same time, the rate on the benchmark 30-year fixed rate mortgage last week rose to a 52-week high of 4.16 percent. U.S. interest rates have climbed since the Nov. 8 election of Donald Trump. Investors have bid rates higher because they expect Trump’s program of tax cuts and higher spending on defense and infrastructure will boost economic growth and inflation.
“The existing home sales data suggest that the rise in mortgage rates since the presidential election had little effect on housing demand during the month,” Barclays Capital analyst Michael Gapen said in a report.
But the November home sales figures reflect mortgages issued over the preceding three months, he added, suggesting that rising interest rates could crimp sales in early 2017.
The Realtors predict that higher rates and declining affordability in many parts of the country likely will lead to only a small gain in sales of existing homes next year - a 2 percent increase to about 5.52 million.
“Some prospective buyers are going to be straining to get to an affordable monthly payment with mortgage rates higher and may take a harder line on prices (or settle for less home) to make the numbers work,” Stephen Stanley, chief economist at Amherst Pierpont Securities, said in a research note.
Still, a healthy job market has given more Americans the confidence to shop for homes. Unemployment is at a nine-year low 4.6 percent.