Washington
CNN
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Sales of existing homes in the U.S. fell to their lowest level in nearly three decades last year, as skyrocketing home prices and high mortgage rates squeezed homebuyers.
The National Association of Realtors said Friday that sales of pre-owned homes, which make up the majority of the market, totaled 4.06 million in 2024. This is the lowest level since 1995 and slightly below the corresponding anemic level of 2023.
The average rate for a conventional, 30-year fixed mortgage peaked at 7.22 percent last year. After briefly slipping to around 6.6 percent, it has rallied in recent weeks, hitting 7.04 percent last week and hovering around 6.96 percent this week, according to Freddie Mac.
Meanwhile, the median price of an existing home has climbed for 18 straight months, reaching a record high of $407,500 in 2024. In December, the median price was 4,404,400.
Despite tough conditions for buyers, there was some acceleration toward the end of 2024, with existing home sales rising 2.2 percent in December, the fastest pace since February 2024, seasonally to 4.24 million. is the adjusted annual rate.
“Home sales showed a solid recovery in the final months of the year despite lower mortgage rates,” NAR Chief Economist Lawrence Yoon said in a release. “Consumers clearly understand the long-term benefits of home ownership. An increase in inventory, along with employment and wage growth, is having a positive impact on the market.
The US housing market may not improve much for buyers this year.
Mortgage rates are expected to remain above 6% through 2026. Mortgage rates were also high in the 1980s, but home prices were much lower then. Buyers today are contending with home prices hovering near unprecedented highs.
And in some markets, homeowners are also dealing with sky-rocketing home insurance premiums. This is not expected to change this year.
Another long-standing problem for housing affordability is the persistent shortage of homes on the market. Total housing inventory improved in 2024, but supply is nowhere near keeping up with demand.
According to a recent estimate by Freddie Mac, the housing shortage is 3.7 million units. In December, inventories stood at 1.15 million units, down 13.5 percent from November but up 16.2 percent from a year ago.
A major reason for the underpayment is the so-called lock-in effect, where some homeowners who locked in low mortgage rates before the Federal Reserve did not have to start raising interest rates in 2022, because they had to take on one. Will be needed. A mortgage with a much higher rate if he buys a second home.
However, some sold last year due to life events such as marriage, divorce or new children, which contributed to last year’s steady increase in housing inventory. The problem for this year is that homeowners don’t have much incentive to sell.
Higher borrowing costs also weighed on home construction last year, but there is a sense of optimism among builders that the supply of homes could increase this year, according to the National Association of Home Builders.
Scott Turner, President Donald Trump’s pick for the U.S. Department of Housing and Urban Development, said during his confirmation hearing on Capitol Hill that he is committed to reviewing and reducing regulation. Since the Fed is expected to cut interest rates only a few times this year, deregulation could play a role in easing pressure on the housing market.
But easing regulations likely won’t be enough to meet some of the Trump administration’s promises of tariffs and mass deportations, which could increase the cost of building new housing.
