Sales of previously owned homes fell to the lowest level in 17 months in November as rising mortgage rates pushed buyers out of the market. The Midwest posted the only advance.
The National Association of Realtors said sales of existing single-family homes dropped 2.6 percent to a seasonally adjusted annual rate of 3.81 million, down from 3.91 million in October, when sales rose 0.5 percent.The November rate was the lowest since June 1993, when it was 3.70 million annually.
The sales rate reached a recent peak of 4.35 million last December, two months before the Federal Reserve began raising interest rates to slow the economy and cool inflationary pressures.
Thirty-year, fixed-rate mortgages averaged 9.18 percent in November, up from 8.93 percent in October and 7.15 percent last February, according to surveys by the Federal Home Loan Mortgage Corp.
A jump from 7 percent to 9 percent would add $209 to the monthly payment on a $150,000 mortgage.
"We expected sales to slow down, given the direction rates have taken," said Edmund G. Woods Jr., the Realtors association president.
Association economist John A. Tuccillo predicted further declines, "but nothing catastrophic."
Despite the November drop, Woods said, the sales pace remained strong. The Realtors estimate that sales for all of 1994 will reach 3.97 million, second-highest ever and well above the 3.80 million homes posted in 1993.
The median price of an existing home was $108,100 in November, up from $107,100 a year ago. The median is the midpoint, meaning half of the homes cost more and half cost less.