Home sales in November were up from the prior month as buyers rushed to take advantage of low interest rates, keeping 2021 on track for the strongest year since 2006.

Prices continued double digit annual jumps as inventory remained at historic lows. The affordability challenge of buying a home pushed the share of first-time buyers in the market to historic lows, according to a monthly report from the National Association of Realtors.

After a slight slowdown at the end of the summer, November marked a third consecutive month of increasing sales of existing homes, which include single-family homes, townhomes, condominiums and co-ops. Sales were up 1.9% from October to a seasonally adjusted annual rate of 6.46 million in November. Home sales were down 2% from a year ago, though, when the US real estate market saw a seasonally atypical surge in home buying because of the pandemic.

“Determined buyers were able to land housing before mortgage rates rise further in the coming months,” said Lawrence Yun, NAR’s chief economist.

While mortgage rates are expected to rise in the next year, Yun said he didn’t expect the increase to be dramatic and forecasts a rate of 3.7% by the end of 2022. Still, he said, “Locking in a constant and firm mortgage payment motivated many consumers who grew weary of escalating rents over the last year.”

Home prices continued to climb as buyers competed over a near record low inventory of homes. The median price of a home in November was $353,900, up 13.9% from last year. That’s 117 straight months of annual increases – more than nine years – which is the longest-running streak on record.

Part of the reason the median price continues to rise is that more expensive homes are being sold. Sales of homes priced between $750,000 to $1 million were up 37% from last year, and homes over $1 million were up 50%. Meanwhile, homes priced between $100,000 and $250,000 were down by 19%, as inventory was scarce.

Looking toward next year, Yun said that inflation and the pace of price appreciation are expected to subside. A panel of 20 economists and housing experts convened by NAR for its recent annual Real Estate Forecast Summit came to a consensus forecast that inflation would likely ease in 2022 at a 4% rate, while home prices are expected to rise at a more moderate pace of 5.7%.

“In 2022 we do anticipate higher rents,” Yun said. “Home prices will remain elevated given the shortage of inventory, although prices will rise more moderately.”

Typical annual median price increases would be around 4% or 5%, normally one or two percentage points above the Consumer Price Index change, said Yun. An annual increase of 13.9% is not typical, but it is a more moderate jump than annual price increases of 20% or more seen earlier this year.

The main driver of home price appreciation continues to be low inventory. There were 1.11 million homes available at the end of November, down 9.8% from October and down 13.3% from one year ago. That’s less than half of the historical average, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting.

“Buyers continued to snap up available homes, as for-sale listings only lasted 18 days on the market,” Kan said. “This swift competition continues to exert upward pressure on sales prices, overall home price growth, and is impacting prospective first-time buyers.”

At the current sales pace, it would take 2.1 months to sell all the homes currently for sale. That’s a decline from both the prior month and from one year ago. A more balanced market has closer to six months of inventory available.

More new home completions and more people selling their home should help inventory levels next year, said Yun, adding that because interest rates will be a little higher, he anticipates fewer sales, which may allow for a less competitive and aggressively priced market.

But that may be cold comfort for first-time buyers who have been increasingly pushed out of the market. The share of first-time buyers in November was 26%, down from 32% a year ago. It matches a share not seen since January 2014, which is the lowest since NAR began tracking in 2008.

The November report shows a continuation of trends that are pushing homeownership further away from first-time buyers, said Robert Frick, corporate economist at Navy Federal Credit Union.

“Inventories are lower, especially for lower-priced homes, and prices are continuing to rise at about a 15% annualized rate,” he said. “Forecasts have price increases falling into the single digits next year, but the fundamentals of low supply, high demand and rising consumer wealth don’t appear to be easing anytime soon.”

The shrinking share of first-time homebuyers is concerning, said Yun.

“If the new homeownership rate falls as prices rise, we are creating a divided society,” said Yun. “People don’t feel like they are participating in what they consider to be American life through homeownership. All their work to build up savings can feel less meaningful in the face of rising prices.”