Existing home sales fell 4.3% in November as buyers faced higher interest rates and a tight supply of homes for sale, the National Association of Realtors said Thursday.
Sales dropped for the third straight month to a seasonally adjusted annual rate of 4.9 million from 5.12 million in October.
That was 1.2% off the November 2012 pace and the first time in 29 months that sales were below year ago levels.
Economists' median forecast was for a November rate of 5.1 million, according to a survey by Action Economics.
Home sales are being hurt by higher mortgage interest rates, limited inventory and tight credit, says Lawrence Yun, NAR chief economist.
The national median existing price was $196,300 in November, up 9.4% from the year before.
Distressed homes accounted for 14% of November sales, unchanged from October.
Inventory expanded to a 5.1 month supply, up from 4.9 months in October. That means all homes would be sold in that time frame at the current sales rate. A six or seven month supply is a balanced market.
In November, the inventory of existing homes for sale was 5% above a year ago, NAR says. The supply of homes for sale is up 8.4% from when it bottomed in January, on a seasonally adjusted basis, says Jed Kolko, Trulia economist.
More homes for sale mean buyers have more choices, which may lead to lower price gains going forward.
The report comes a day after a strong showing for November housing starts and the Federal Reserve's announcement that it will trim its bond buying starting next month.
The Fed's tapering, which was expected, will likely drive mortgage interest rates higher. That'll be "a tough reality check for many homebuyers," says Ellen Haberle, economist for real estate brokerage Redfin.
Many buyers have come to expect rates under 5%. She expects 30-year fixed rate mortgages to reach or exceed 5% in the coming weeks.
Separately, market watcher Zillow reports today that home price increases this year will beef up U.S. home values by almost $1.9 trillion.
After gains last year, that means home owners will have regained almost half of the cumulative value lost after the housing crash between 2007 and 2011, Zillow says.
Yet slower home price gains are ahead as the housing market transitions away from its robust bounce off the bottom to more sustainable growth rates, says Stan Humphries, Zillow economist.
By Julie Schmit