LOS ANGELES (AP) — Sales of pre-occupied U.S. homes fell to a nearly 30-year low in 2024 for the second time in as many years. High mortgage rates, Rising house prices And some properties on the market freeze potential homebuyers out of the market.
Sales of existing U.S. homes were 4.06 million last year, down 0.7 percent from 2023, the National Association of Realtors said Friday. This is the weakest year for home sales since 1995, echoing results for the full year of 2023.
The median home price for the past year rose 4.7 percent to an all-time high of $407,500, the NAR said.
The U.S. housing market faces a decline in sales starting in 2022, when mortgage rates begin to rise from post-pandemic lows. The average rate on a 30-year mortgage hit a 23-year high of about 8 percent in October 2023 and briefly hit a 2-year low last September, but according to mortgage buyer Freddie Mac, most of the 7 Hovering around percent. .
Rising home loan borrowing costs have limited the purchasing power of house hunters with rising prices over the years. Meanwhile, a lack of homes for sale has helped drive up prices, helping to sideline many homebuyers and sellers.
“How is it possible that home sales are so low, considering that the US population has increased by more than 70 million during this period from 1995 to today?” asked Lawrence Yoon, NAR’s chief economist. “One could answer that question in part because of the affordability problem. “Record home prices, mortgage rates increased, but also a lack of inventory.”
At the end of December, there were just 1.15 million homes on the market, NAR said. That’s well below the monthly historical average of about 2.25 million.
The inventory on hand at the end of last month is equivalent to 3.3 months of supply at the current sales pace. In a more balanced market between buyers and sellers, there is a 4 to 6 month supply.
Home sales in December rose 2.2 percent from the previous month to an annual pace of 4.24 million on a seasonally adjusted basis. It was the third straight monthly increase in sales and topped the 4.2 million pace forecast by analysts polled by FactSet.
Sales rose 9.3 percent in December compared to the same month last year.
The median home sales price rose for the 18th consecutive month in December to $404,000, up 6% from a year ago.
Limited inventory, especially in the more affordable price range of a given market, helps drive prices higher. This is one reason why many first-time homebuyers, who have no home equity for their down payment, continue to struggle to afford a home.
They accounted for 31% of all homes sold last month, up from 30% in November and 29% in December 2023. However, the annual share of first-time buyers was 24%. It has historically been 40 percent.
