US existing home sales drop for the first time in 6 months amid rising prices and record-low supply

• Sales of existing homes in the US contracted for the first time in six months in November, signaling rising prices and historically low supply is finally slowing the housing market's rally.
• Home sales fell 2.5% last month to a seasonally adjusted annual rate of 6.69 million, according to the National Association of Realtors. The pace is still up 25.8% from the year-ago period.
• The median price for existing homes fell to a six-month low as well, dipping month-over-month to $310,800 from $313,100.
• Historically low mortgage rates should set a floor for sales, but the pace of homebuying is set to stay flat through 2021, Nancy Vanden Houten, lead US economist at Oxford Economics, said.

Sales of preowned homes in the US contracted for the first time in six months in November as soaring prices and dwindling supply butted heads with the recent housing-market boom.

Existing home sales fell 2.5% last month to a seasonally adjusted annual rate of 6.69 million, the National Association of Realtors said Tuesday. Economists surveyed by Bloomberg expected sales to fall to 6.7 million.

All four regions saw sales either hold steady or decline, with the South seeing the biggest drop. Still, sales remain nearly 26% higher than their pace in November 2019.

The median existing-home price dipped for the first time in six months as well, to $310,800 from $313,100, according to NAR. Prices still sit 14.6% higher from the year-ago period.

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Total home inventory fell to a record-low 1.28 million. At the current pace of sales, that supply would be diminished in roughly 2.3 months.

"Given the COVID-19 pandemic, it's amazing that the housing sector is outperforming expectations," Lawrence Yun, NAR's chief economist, said in a statement.

The contraction in sales marks the first sign that, after months of strong buying, the sector's rally might be petering out. Homebuilders have struggled to boost supply through the buying spree, and outsized demand has lifted prices throughout the pandemic.

Record-low mortgage rates should set a floor for sales, but the housing-market frenzy is poised to die down, Nancy Vanden Houten, lead US economist at Oxford Economics, said.

"After growing in 2020 at the strongest pace since 2015, we expect existing home sales to be about flat next year," she added.

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