Existing-home sales — meaning sales of previously occupied homes, rather than newly built homes — have been on a downward trend all year. And with both mortgage rates and prices remaining fairly high, home shoppers have pulled back. A new report by the National Association of Realtors (NAR) indicates that buyers continue to take a wait-and-see approach.
“December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement. “However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”
Existing-home sales fall for 11th straight month
Existing-home sales encompass all sales of non-new-construction homes, including single-family houses, condos, townhouses and co-ops. According to NAR, U.S. existing-home sales fell in December for the 11th month in a row. The decrease was 1.5 percent from November and 34 percent compared to December 2021.
The West region experienced no decrease in existing-home sales from last month but a 43.4 percent year-over-year decline. In the South, existing-home sales dropped 2.2 percent since November, and 33.1 percent year-over-year. Sales in the Northeast fell 1.9 percent for the month and 28.8 percent for the year, and the Midwest saw a decrease of 1 percent for the month and 30.3 percent for the year.
Homes are also sitting on the market for longer: Properties stayed on the market for approximately 26 days in December, which was up from 24 days in November and 19 days in December of last year.
Yun attributes the plunge in sales to mortgage rates, which peaked in late October and early November. Rates have pulled back since then.
The slowdown was especially pronounced in the $1 million-and-up price range. “The luxury end is seeing a larger hit, perhaps because of weakness in the stock market,” Yun told reporters Jan. 20.
Median sale prices lose momentum
Despite the number of existing-home sales falling and mortgage rates remaining on the high side, median sale prices are cooling rather than crashing. The nationwide median sale price for existing homes is now $366,900, which is slightly lower than November’s median price but still up 2.3 percent compared to December 2021.
December marked the 130th consecutive month of year-over-year median sale price increases. In other words, it’s been almost 11 years since home prices were in decline. That’s the longest-running streak since NAR started keeping records.
Regionally, home prices rose year-over-year in all four regions tracked by NAR. The West has the highest median price by far at $557,900, a fractional increase since December 2021. In the Northeast, the median rose 1.6 percent to $391,400, and in the South, it rose 3.5 percent to $337,900. The Midwest had the lowest median sale price in December at $262,000, a 2.9 percent increase over last year.
Housing inventory remains scarce
Total housing inventory — the overall number of homes on the market for sale — sat at 970,000 units at the end of December. This is up 10.2 percent from a year ago but a decrease of 13.4 percent from November. At the current sales pace, this represents about a 2.9-month supply, which is well below the amount needed for a balanced market, typically thought to be five to six months. “Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun said.
