WASHINGTON: US existing home sales fell in the final month of 2023, ending a tough year for real estate with full-year sales at the lowest level since 1995, according to industry data released Friday.
For all of last year, sales of existing homes, which form the vast majority of the market, came in at 4.09 million, said the National Association of Realtors (NAR) in a statement.
This was significantly below 2022’s figure of 5.03 million, as the interest-sensitive real estate sector struggled in the wake of rapid interest rate hikes by the Federal Reserve.
The median sales price also hit a record high of $389,800 in 2023, said the NAR.
Between November and December, sales of all types of homes and condos dipped 1.0 per cent, to a seasonally adjusted annual rate of 3.78 million, the NAR said.
The aim of central bank interest rate hikes since early 2022 was to cool demand by raising borrowing costs, so as to tamp down stubborn inflation.
But even as inflation has come down from a peak in recent years, Fed officials have held rates at a 22-year high to ensure the battle is won.
Meanwhile, a lack of inventory has bogged down the property market further, with homeowners reluctant to sell after having locked in lower mortgage rates.
But NAR chief economist Lawrence Yun believes that “the latest month’s sales look to be the bottom before inevitably turning higher in the new year.”
“Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months,” he said.
The popular 30-year fixed-rate mortgage averaged 6.6 per cent as of Thursday, according to home loan finance company Freddie Mac.
This is markedly below the 7.8 per cent average seen in late October and the lowest since May 2023, in what Freddie Mac called “an encouraging development for the housing market and in particular first-time homebuyers.”
There may be further reprieve ahead, with the Fed mulling the right time to cut rates and signalling three reductions this year.
In December, the median home price across housing types was $382,600, 4.4 per cent from the year-ago period. – AFP
