WASHINGTON – Sales of existing U.S. homes unexpectedly rose by 2.7 percent in November as low mortgage rates (search) fueled a record pace of home-buying, a trade association report showed Wednesday.
Sales of previously owned homes climbed to a seasonally adjusted annual rate of 6.94 million units last month from an upwardly revised 6.76 million unit pace in October, the National Association of Realtors (search) said.
"Mortgage interest rates dropped a quarter of a percentage point in late summer and then stabilized. Coupled with a growing labor market and a rising economy, this created optimal conditions for the housing sector," said NAR chief economist David Lereah.
Analysts had expected sales to hold steady at October's originally reported 6.75 million unit rate.
Lereah said he expects home sales to moderate slightly next year from 2004's record-setting pace, but said he was not concerned about a housing price bubble.
"We think slower sales will help to create a better balance between home buyers and sellers, but with tight inventories of homes available for sale, price appreciation hasn't slowed yet," he said.
The national median home price (search) rose 10.4 percent from the same month a year earlier to $188,200, the NAR report showed. That is the largest gain since July 1987.
The supply of homes available for sale at the current pace was unchanged from October at 4.3 months' worth.
"We had thought that things would moderate a bit but it looks like it hit a record high again," said David Resler, chief economist at Nomura Securities International (search) in New York.
"Mortgage purchase applications were at a new high in November, and it looks like that mortgage money was going into existing homes," he added.