Sales of previously owned homes edged 0.2 percent lower in November from a record level the month before, a trade group said today. The declines came in the Northeast and Midwest.
Existing single-family homes sold at a seasonally adjusted annual rate of 4.38 million units last month, down from 4.39 million units in October, the National Association of Realtors said.
October's sales rate had been the highest since the group began tracking sales in 1968.
"It was a matter of time before we saw some downward trend, however slight. We expect a continued slowdown in the coming months, though nothing dramatic," said the group's president, Layne Morrill.
According to economists, plentiful jobs, rising income and low mortgage rates are supporting home sales. Mortgage rates in November averaged 7.21 percent, the lowest in 21 months.
The median price of an existing home -- meaning half sold for more and half for less -- was $124,400, up 6 percent from a year ago.
By region, sales fell 1.6 percent in the Northeast to a rate of 630,000 units and 2.7 percent in the Midwest to a seasonally adjusted 1.09 million units. Sales were unchanged in the West at a rate of 990,000 units. They rose 1.8 percent in the South to 1.67 million units.
November's drop was to be expected after sales set records in August, September and October. Still, that doesn't signal that the housing market is weakening, analysts said.
Home resales make up about 85 percent of all U.S. single-family home sales. In October, sales increased a revised 1.9 percent to an annual pace of 4.39 million units, previously reported as a 2.1 percent gain.
Demand for houses -- new and old -- is a key indicator of economic activity because new owners tend to buy products that range from furniture and appliances to garden supplies.
Investors and analysts watch for housing gains because they ripple through the economy in the form of demand for furniture, appliances and other items that keep factories, wholesalers and retailers busy. Indeed, catalog sales at Williams-Sonoma Inc., which includes the Pottery Barn, Hold Everything and Williams-Sonoma catalogs, are running roughly 12 percent above last year this holiday season, according to analysts at BancAmerica Robertson, Stephens & Co. That's about three times the gain expected for the overall retail industry.
There are signs demand has room to grow, too. An industry survey showed builders are more optimistic than at any time this year, and inventories of new and used homes are lean.
Those who believe the housing market has room to grow point first to low interest rates and high employment. "Mortgage rates are raising affordability and jobs are lifting confidence," Susan Hering, an economist at IndoSuez Carr Futures, said before the report.
Mortgage rates have been falling since April, rousing new demand for houses as well as mortgage applications. In November, the average rate on a 30-year, fixed mortgage fell to 7.21 percent from 7.30 percent the month before, pushing down the average principal and interest payment on a $100,000 loan to $679.47 from $685.57 in October.
Last week, the average rate on a 30-year, fixed mortgage fell to 6.99 percent, the first time its been below 7 percent since the week ended Feb. 16, 1996, when it was 6.94 percent.