U.S. Home Sales Post First Yearly Drop in 29 Months

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Existing homes sales in the U.S. fell 1.2 percent in November, marking the first yearly decrease in sales in 29 months, according to the National Association of Realtors. 

Sales for all existing housing types -- including single-family homes, townhomes, condominiums and co-ops -- reached a seasonally adjusted annual rate of 4.90 million in November, dropping from the 4.96 million-unit pace last November. The total was 4.3 percent lower than the 5.12 million sold in October -- which was a 3.2 percent monthly decrease from September. 

Amid a healthy recovery, the U.S. housing market is now being squeezed, NAR said. 

"Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit," NAR chief economist Lawrence Yun said in the report. "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."

Yesterday, the Fed announcement it will begin tapering on its bond-buying program, a move that is expected to further raise interest rates. 

Total housing inventory dropped 0.9 percent to 2.09 million existing homes at the end of November, representing a 5.1-month supply at the current sales pace, NAR reports. 

However, home construction is expected to pick up in coming months, as home builders confidence reached levels seen in 2005, while housing starts reached the highest level in more than five years. 

While home sales fell, home values keep rising. The national median existing-home price of all types was $196,300 in November, increasing 9.4 percent from last year. However, this is the first time in 12 months that the yearly increase is not in double-digits. 

In November, distressed home sales -- foreclosures and short sales -- accounted for 14 percent of all sales, unchanged from October, but lower than the 22 percent last year. 

First-time buyers accounted for 28 percent of purchases in November, unchanged from October, but lower than the 30 percent in November 2012.

All-cash sales represented 32 percent of transactions in November, increasing from 31 percent in October and 30 percent in November 2012.  

New mortgage rules designed to protect borrowers, effective in January, may cause a further tightening in lending practices, NAR said. 

"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," NAR President Steve Brown said. "The new rules may tighten credit too much, but we're hopeful regulators will make adjustments if this proves to be true."