US existing home sales delivered a modest but symbolically important gain in November, offering fresh evidence that lower mortgage rates are beginning to thaw a market that has been constrained for much of the past two years. While activity remains well below long-term averages, the latest data suggest a fragile recovery is taking shape as borrowing costs ease and buyers cautiously re-enter the market.

Sales Momentum Builds as Rates Pull Back

Existing home sales rose 0.5% month over month to an annualized pace of 4.13 million units, marking the third consecutive monthly increase and the strongest reading in nine months. Although the figure came in slightly below market expectations of 4.2 million, it reflects a clear directional shift compared with the stagnation seen earlier in 2025.

The improvement coincided with a pullback in benchmark mortgage rates during the autumn, driven in part by weaker-than-expected labor market data that reinforced expectations for easier monetary policy. For many buyers, even incremental declines in borrowing costs can meaningfully improve affordability, particularly in higher-priced regions.

Single-Family Homes Lead the Recovery

The rebound was led by single-family homes, where sales rose 0.8% to 3.75 million units. This segment continues to dominate the US housing market and remains the primary beneficiary of shifting rate dynamics. Demand appears to be returning among move-up buyers and households that delayed purchases during last year’s rate volatility.

By contrast, activity in multi-family and condominium segments has remained more uneven, reflecting sensitivity to local supply conditions and investor participation. Overall, the composition of sales suggests that owner-occupiers, rather than speculative buyers, are driving the latest gains.

Inventory Tightens, Supply Signals Flash Yellow

Perhaps the most notable development in the November report was the renewed tightening in housing supply. Total inventory fell 5.9% from the previous month to 1.43 million units, equivalent to 4.2 months of supply. This represents the weakest inventory level since March and signals that sellers are not yet returning to the market in large numbers.

Many homeowners remain locked into ultra-low mortgage rates secured during 2020–2021, reducing their incentive to sell. As a result, even a modest pickup in demand can quickly translate into tighter conditions, limiting the pace at which sales can sustainably accelerate.

Price Growth Cools as Market Rebalances

Despite firmer sales, price pressures remain contained. The median existing home price rose 1.2% year over year to $409,200, one of the slowest increases since mid-2023. This moderation reflects a market that is still adjusting after years of rapid appreciation and stretched affordability.

Slower price growth may help stabilize buyer psychology, encouraging hesitant households back into the market. At the same time, it underscores that the current recovery is being driven more by financing conditions than by overheating demand.

Outlook

Looking ahead, the trajectory of US housing will depend heavily on interest rates, labor market resilience, and inventory dynamics. While economists expect existing home sales to edge higher in the near term, longer-term forecasts point to a more subdued pace in 2026 before stabilizing again in 2027.

For investors and policymakers, the key risk lies in supply constraints. If inventory continues to tighten while demand improves, affordability pressures could resurface quickly. Conversely, a broader economic slowdown could cap the recovery. The coming months will reveal whether November’s gains mark the start of a durable trend or merely a temporary reprieve.