Sales have slipped by 1.0%, according to NAR
Existing-home sales in the US dropped by 1.0% in December with activity for the year plummeting to its lowest level since 1995, according to the National Association of Realtors (NAR).
Sales slid on a year-over-year basis in each of the four major US regions, NAR said Friday, with monthly sales down in the Midwest and South. The West saw a sales uptick last month, while activity in the Northeast remained largely unchanged.
Existing-home sales, which include single-family homes, townhomes, co-ops and condominiums, hit a seasonally adjusted annual rate of 3.78 million last month, 6.2% lower than the December 2022 pace of 4.03 million.
NAR’s chief economist Lawrence Yun said the market’s subdued December performance likely marked its bottom before a probable recovery in 2024. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear in the market in upcoming months,” he said.
Max Slyusarchuk, chief executive officer at A&D Mortgage, also underlined the likelihood of a sales uptick by the end of 2024 – although there’ll still be plenty weighing against the market throughout the year.
“While home sales remain flat for now, the trend won’t continue,” he said in a statement following the release of the new NAR data. “In fact, with interest rates expected to ease through 2024, we believe home sales may increase by nearly a million homes a month by the end of the year.
“But while that sounds impressive, a full housing recovery where supply and demand are in balance remains years away.”
Existing-home sales retreated by 1.0% in December. Among the four major U.S. regions, sales slipped in the Midwest and South, rose in the West and were unchanged in the Northeast. https://t.co/MRvBauOozR
— National Association of REALTORS® (@nardotrealtor) January 19, 2024
Affordability continues to challenge US homebuyers
For Selma Hepp, CoreLogic’s chief economist, housing affordability will remain a central concern throughout a projected market revival in 2024.
“Existing home sales are showing that the market is still cool, but not completely frozen,” Hepp said. “But an early look into new contracts signed suggests that existing home sales are on the rebound and will improve this year.
“The bad news is that home affordability is not likely to improve for potential homebuyers, so those looking to buy a home should make an offer before the spring homebuying season starts.”
Inventory down, prices up
While available housing inventory jumped by 4.2% in December compared with the same month in 2022, hitting the 1-million-unit mark, it plunged by 11.5% from November. At 3.2 months, unsold inventory is up from 2.9 months in December 2022 and lower than the 3.5 months available the prior month.
With all four major regions seeing prices increase, the median existing-home price ticked upwards to $382,600, an increase of 4.4% on a year-over-year basis. Yun said price appreciation was a trend to watch with affordability continuing to pose a significant challenge for would-be buyers.
“Despite sluggish home sales, 85 million homeowning households enjoyed further gains in housing wealth,” he said. “Obviously the recent, rapid three-year rise in home prices is unsustainable.
“If price increases continue at the current pace, the country could accelerate into haves and have-nots. Creating a path towards homeownership for today’s renters is essential. It requires economic and income growth and, most importantly, a steady buildup of home construction.”
