U.S. existing home sales fell in December, marking the sixth decline in the past seven months and confirming that 2023 will be the worst year for home sales since 1995.
Despite high interest rates, demand for housing remains very strong. But many owners are reluctant to put their homes on the market because selling would mean forgoing low-interest mortgages.
This increased home construction and new home sales, but depressed the much larger existing home market.
It has also pushed up home prices, surprising many analysts who thought higher interest rates would dampen home price growth. In December, the median sales price reached a record high of $389,800 in 2023.
Existing home sales are measured by the National Association of Realtors at closing, typically one to two months after the purchase contract is signed. That means the December settlement covers sales concluded in November and October, when interest rates were well above 7% and peaked at 8%. Since then, mortgage rates have fallen significantly.
According to the National Association of Realtors, sales fell 1% from the previous month to an annualized and seasonally adjusted 3.87 million.
Total home sales in 2023 will fall to 4.09 million, the lowest level since 1995, but this number does not take into account the large increase in the number of homes and population in the United States.
The inventory of unsold existing homes fell 11.5% from the previous month to 1 million units at the end of December, equivalent to 3.2 months' supply at the current monthly sales pace. However, compared to a year ago, inventories are up 4.2%.
