Existing Homes Fall 1.5% in December, Marking 11th Month of Declines
The performance was better than expected and prices inched up a little from a year ago.
A home is offered for sale, Jan. 18, 2023, in Chicago.(SCOTT OLSON/GETTY IMAGES)
Sales of existing homes slid 1.5% in December, somewhat better than expected but the 11th straight month of decline, the National Association of Realtors said on Friday.
EXPLAINER:
What Is the Debt Ceiling? ]The number was better than estimates of a 3.4% drop and brings the annual rate of home sales just a hair above 4 million. Sales are now down 34% from year-ago levels.
“December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” said NAR Chief Economist Lawrence Yun. “However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”
Prices, meanwhile, were slightly higher with the median selling price of $366,900 coming in at 2.3% above a year ago.
Housing has taken it on the chin since the Federal Reserve began raising interest rates in earnest last year to bring down inflation. The Fed meets Jan. 31 to Feb. 1 and is widely expected to hike rates again, most likely by a quarter percentage point. Recently, top Fed officials have sounded the message they are not finished with raising rates.
Mortgage rates have doubled over the past year, although there has been some relief of late. While that directly affects the ability of would-be homeowners to afford a new home, it has also kept sellers on the sidelines as they may have mortgages with rates at or below 3% and so be less eager to move.
“Most homeowners still have a significant equity cushion that should give them a good number of options if they are contemplating a sale,” Danielle Hale, Realtor.com chief economist, said ahead of the report’s release.
“However, evaporating demand has ended the strong sellers market of the past several years, and still-falling home sales tell us that many buyers are still not able to afford a purchase or not yet convinced that the market is tilted sufficiently in their favor to move forward,” Hale added. “The housing market is entering ‘nobody’s market’ territory as buyers and sellers remain largely in a stalemate.”
In the new home market, builders have been offering incentives and paying down some mortgages to entice buyers. The National Association of Home Builders saw a slight increase in builder confidence in January, according to the release of its monthly survey on Wednesday.
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