US Home Sales for Existing Homeowners Fall to End of Worst Year since 1995
In December the housing market suffered its lowest year in almost 30 years, as homes sold fell.
The National Association of Realtors published data on Friday (19 January) showing that contract closings have fallen by 1 percent compared to a month ago. This is equivalent to 3.78 million contracts per year. 2023’s sales are anticipated to be the lowest since 1995.
The housing market – which is one of the most vulnerable economic sectors to interest rates – was in a state of turmoil due to the Federal Reserve increased borrowing costs at the highest level seen since the beginning of 2000.
Since then, policymakers have shifted their focus towards lowering rates. Rates on mortgages have fallen from October, after they reached a peak of around 8 percent. Many homeowners hesitate to sell their homes and move to a different location before rates fall further.
Sales in the last month seem to be at a low level but they could rise again in the next year. The mortgage rates are dropping significantly from two months ago. The inventory will increase in the upcoming months.
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This week’s data revealed that mortgage applications for home purchase increased to the highest level since the beginning of July. The general mood among homebuilders has also improved, which can increase the number of new construction.
The number of houses which were owned previously, and for sale in the last month fell to 1 million, which is the lowest since March. To sell all the properties available at this pace it would take 3.2 months. Realtors consider any inventory of less than five months be insufficient.
This shortage of inventory helps to keep prices at a high level. In December the median price for selling rose to US$382,600. All four regions saw an increase in prices. The prices reached a record of $398,800 by 2023.
About 45% of houses were sold in less than one month on the market. The homes were listed for 29 days as opposed to 25 days in November.
Based on new projections, which cite the rising cost of housing relative to income, it will take years for the resale sector to fully recover from its pre-pandemic level.
The majority of homes sales are done by existing properties and are based on contract closings. The next week, figures on sales of new homes will be released. This reflects contract signings.
