If you spent the month of December wrapping up Christmas presents instead of moving boxes, you are not alone. Existing-home sales dropped 1.0% compared to the previous month to a seasonally-adjusted annual rate of 3.78 million, according to the National Association of Realtors (NAR) . Even though the holidays are not known to be the height of real estate activity, primarily owing to busy schedules and cold weather, this number is still 6.2% lower than it was in December 2022.
This is not an isolated phenomenon either. On an annual basis, existing home sales, which include single-family homes, townhomes, condos, and co-ops, dropped to their lowest level since 1995 as elevated interest rates and disappointing inventory took a toll on house hunters’ motivation. In addition, the national median price reached a record high of $389,800, leaving many would-be buyers on the sidelines.
Despite the slow rate of sales, many experts remain optimistic. “The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” says NAR Chief Economist Lawrence Yun. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”
Good News: Inventory on the Rise
With fewer potential buyers, inventory is finally getting some breathing room. The number of homes for sale in December grew by 4.9% compared with the same month a year earlier, according to Realtor.com. Some homeowners have finally resigned to let go of their property despite the high mortgage rates that may have caused them to hold on to their homes longer than they would have liked, with the number of new home sellers entering the market last month surging 9.1% compared to December 2022.
Don’t expect to find the perfect home hitting every point of your wish list just yet, however. The unsold inventory sits at a 3.2-month supply at the current sales pace, a far cry from the five to six months required to reach a balanced market. “In a historical context, the inventory level still may not be that favorable,” points out Realtor.com Senior Economic Analyst Hannah Jones. “But it’s a lot better than it was during the pandemic.”
We’ll keep you updated on further developments. In the meantime, if you’d like more information about buying/selling or refinancing in today’s market, give us a call or drop us an email.
