NEW YORK (CNN/Money) - Sales of existing homes set a record in November, according to a trade group report Wednesday that topped Wall Street expectations.

The National Association of Realtors' (NAR) report showed homes selling at an annual pace of 6.94 million, up 2.7 percent from the revised 6.76 million October sales pace.

Economists surveyed by Briefing.com had forecast sales at an annual rate of 6.75 million, unchanged from the prior month.

Last month's sales activity was 13.2 percent above the 6.13 million unit level in November 2003. The previous record was 6.92 million in June 2004, the report said.

David Lereah, NAR's chief economist, said low interest rates get much of the credit.

"Mortgage interest rates dropped a quarter of a percentage point in late summer and then stabilized," he said in the report. "Coupled with a growing labor market and a rising economy, this created optimal conditions for the housing sector."

Lereah expects economic conditions in 2005 will be comparable with this year.

"Our forecast for the housing market is for a continuation of strong home sales, although down a little from the record-setting pace of 2004," he added. "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."

The national median existing-home price was $188,200 in November, up 10.4 percent from November 2003 when the median price was $170,500. The median is a typical market price where half of the homes sold for more and half sold for less.