By Vicki Needham - 12/19/13 12:46 PM EST
Existing home sales fell for the third straight month to the weakest pace in a year, held back by a combination of market forces that are complicating purchases.
Sales, which are completed transactions that include single-family homes and condos, dropped 4.3 percent to a seasonally adjusted annual rate of 4.9 million in November from 5.12 million in October, the National Association of Realtors reported Thursday.
Higher mortgage rates, low inventory and tight credit are weighing on the market's expansion. Sales also were hampered by the 16-day government shutdown in October.
“Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit,” said Lawrence Yun, the NAR chief economist.
“There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction," he said.
A separate report from the Commerce Department on Wednesday showed that home construction hit a five-year high in November, increasing nearly 23 percent.
Homebuilders said the upward trend could be even stronger if not for persistently tight lending conditions for buyers and other hurdles faced by builders, such as rising costs for materials.
Total housing inventory at the end of November declined 0.9 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, compared with 4.9 months in October.
Still, the group expects total sales this year will hit a 5.1 million pace, the best showing since 2007 and the housing market crash.
The median sales price continued to show strong year-over-year growth at $196,300 in November, a slight decrease from October but 9.4 percent higher than a year ago.
Distressed homes — foreclosures and short sales — accounted for 14 percent of November sales, unchanged from October and down from 22 percent in November 2012, which is helping to bolster rising home prices.
The rate for a 30-year fixed-rate mortgage rose to 4.26 percent in November from 4.19 percent in October; the rate was 3.35 percent in November 2012, according to Freddie Mac.
The group expressed concern that new mortgage rules going into effect in January could push up costs for borrowers.
"This means that qualified borrowers are getting a loan that they are very likely to be able to repay, but some borrowers may wind up paying much more for their mortgage, or not get a loan at all due to the tougher standards,” said NAR President Steve Brown, co-owner of Irongate Realtors in Dayton, Ohio.
“The new rules may tighten credit too much, but we’re hopeful regulators will make adjustments if this proves to be true.”
First-time buyers accounted for 28 percent of purchases in November, unchanged from October.
Single-family home sales fell 3.8 percent to a seasonally adjusted annual rate of 4.32 million in November.
Sales fell across all four regions.
They declined 3 percent in the Northeast, 4.1 percent in the Midwest, 2.4 percent in the South and 8.5 percent in the West.