WASHINGTON (Reuters) - U.S. existing home sales surged to an eight-month high in November, but higher mortgage rates and house prices remain a constraint heading into 2025.

Home sales jumped 4.8% last month to a seasonally adjusted annual rate of 4.15 million units, the highest level since March, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales would advance to a rate of 4.07 million units.

It was the second straight monthly rise in sales since a 14-year low was hit in September. Sales vaulted 6.1% on a year-on-year basis, the largest increase since June 2021. Despite the second consecutive annual increase in sales, the outlook for the existing housing market next year remains lackluster. 

Though the Federal Reserve delivered a third consecutive interest rate cut on Wednesday, it projected only two reductions in borrowing costs next year compared to the four it had forecast in September, citing continued economic resilience. 

There is also uncertain surrounding the policies of President-elect Donald Trump's incoming administration.

There have been concerns that tariffs on imported goods, tax cuts and mass deportations of undocumented immigrants could be inflationary. Those concerns, together with the strength in the economy, have pushed up the yield on the 10-year U.S. Treasury note, which mortgage rates track.

Bank of America Securities is forecasting the average rate on the popular 30-year fixed mortgage will be near 6% to 6.5% next year, which would discourage homeowners from putting their homes on the market, keeping supply tight and house prices elevated. Many homeowners have mortgage rates below 5%.

Higher lumber prices from tariffs and worker shortages as a result of expulsions of undocumented immigrations would make it harder for builders to ramp up production of new housing.

"Home sales momentum is building," said Lawrence Yun, the NAR's chief economist. "More buyers have entered the market as the economy continues to add jobs."

Housing inventory fell 2.9% to 1.33 million units last month. Supply increased 17.7% from one year ago. The median existing home price increased 4.7% from a year earlier to $406,100 in November. Home prices rose in all four regions. 

At November's sales pace, it would take 3.8 months to exhaust the current inventory of existing homes, up from 3.5 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.

Properties typically stayed on the market for 32 days in November, compared to 25 days a year ago. First-time buyers accounted for 30% of sales versus 31% a year ago.

That share remains below the 40% that economists and realtors say is needed for a robust housing market.

All-cash sales made up 25% of transactions, down from 27% a year ago. Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from last year.