Home sales plunged in 2023 to a nearly 30-year low amid surging mortgage rates, a shortage of available properties and rising real estate prices.
The National Association of Realtors said Friday that existing U.S. home sales totaled 4.09 million last year, an 18.7% decline from 2022. That is the weakest year for home sales since 1995 and the biggest annual decline since 2007, the start of the housing slump of the late 2000s.
The median national home price for all of last year edged up just under 1% to record high $389,800, the NAR said. Only about 16% of homes around the country were affordable for the typical home buyer last year, Redfin economist Zhao Chen told CBS News last month. By comparison, the share stood at about 40% prior to 2022.
Home inventory remains below pre-pandemic levels
04:08
The average rate on a 30-year home loan was 6.6% this week, according to mortgage buyer Freddie Mac. If rates continue to ease, as many economists expect, that should help boost demand heading into the spring homebuying season, which traditionally begins in late February.
Still, the average rate remains sharply higher than just two years ago, when it was 3.56%. That large gap between rates now and then has helped limit the number of previously occupied homes on the market by discouraging homeowners who locked in rock-bottom rates from selling.
“We need more inventory to get the market moving,” said Lawrence Yun, the NAR’s chief economist.
Despite easing mortgage rates, existing home sales fell 1% in December from the previous month to a seasonally adjusted annual rate of 3.78 million, the slowest sales pace since August 2010, the NAR said.
Where are mortgage rates headed?
Many economists expect mortgage rates to remain just above 6% by year-end.
“We expect mortgage rates to drop back from 6.8% currently to 6.25% by the end of the year,” Thomas Ryan, property economist with Capital Economics, in a report. “In our view, that modest fall won’t be enough to unwind mortgage rate ‘lock-in’ and bring a great deal more stock onto the market. Because of that, we’re forecasting a subdued recovery in sales volumes to 4.3 million by end-2024.”
December’s sales fell 6.2% from a year earlier. Last month’s sales pace is short of the roughly 3.83 million that economists were expecting, according to FactSet.
“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” Yun said. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”
According to a recent survey from Fannie Mae, as of December some 31% of consumers expected mortgage rates to decline over the next 12 months, a more optimistic outlook than the previous month.
Source: cbsnews.com