US Existing Home Sales Drop to End Worst Year Since 1995
The housing market suffered its worst year in almost 30 years in December, as the sales of homes owned by Americans declined.
The National Association of Realtors published data on Friday (19 January) which revealed that closings for contracts have fallen by 1% compared to the same time last month. It’s 3.78 million contracts annually. The sales for 2023 are at their lowest level since 1995.
The housing market, which is among the most sensitive sectors of the economy in terms of interest rates and inflation, was in a state of turmoil last year after the Federal Reserve raised borrowing costs to the highest levels since the beginning of 2000.
Since then, the attention of policymakers has changed towards lower rates. Rates on mortgages have fallen since October, when they peaked at around 8 percent. Many homeowners are hesitant to sell or move their home before rates fall further.
The sales of the last month are at a low before rising again over the course of the year. Mortgage rates have dropped significantly in comparison to a couple of months ago. More inventory will be available in the coming months.
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The data this week showed that mortgage applications for home purchases increased to the highest level since last July. The sentiment of homebuilders has increased which will help boost the availability of new construction.
The number of homes that were previously owned, and for the month of March, sales fell to 1 million. This is the lowest number since March. The current pace of sales would need 3.2 months for all properties that are currently listed on the market. Any supply below five months is considered as insufficient by real estate agents.
The lack of inventory helps to keep prices high. In December, median selling prices increased by 382,600 dollars. This increase was reflected by all the four regional price increases. Prices hit a record high of $398,800 in 2023.
About 45% of houses were sold within one month of being on the market. Property remained for sale 29 days, compared with 25 days in November.
Based on new projections, which cite the high price of homes in relation to income it could take a few some time for the resale market to fully recover to pre-pandemic state.
The majority of home sales are done by existing homes and are based upon contract closures. The next week, figures regarding new home sales will be released, which is a reflection of contract signings.
