FOX Business real estate contributor Katrina Campins discusses whether the housing market is on the brink of a boom after the Fed hints at lower interest rates on “Making Money.”
Existing US home sales After rising the previous month, it fell in December, ending the worst year for the housing market in nearly 30 years.
Existing home sales in December fell 1% from the previous month to an annual rate of 3.78 million units, according to new data released Friday by the National Association of Realtors (NAR). This was the slowest sales pace since August 2010.
On an annual basis, existing home sales fell to their lowest level since 1995.
“Sales have hit a rock bottom in the past month and will inevitably start to pick up in the new year,” said Lawrence Yun, NAR's chief economist. “Mortgage rates are significantly lower than they were just two months ago, and we expect more inventory to hit the market in the coming months.”
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December 26, 2023 Home in Hercules, California. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
According to the report, there were about 1 million homes for sale at the end of December, down 11.5% from the previous month but up 4.2% from the same period a year ago.
Lower inventories contributed to last month's price rise. The median price of existing homes sold in December reached a record high of $389,800.
“Despite weak home sales, 85 million homeowner households enjoyed further increases in home equity,” Yun said. “Clearly, the rapid rise in house prices over the last three years is unsustainable. If price increases continue at their current pace, this country could accelerate towards haves and have-nots.”
Mortgage Calculator: See how much higher interest rates will cost you
Last month, homes sold in an average of just 29 days. This is an increase over the 25 days recorded in November and 26 days recorded in December 2022. COVID-19 pandemicHomes typically sat on the market for about a month before selling.
At the current sales pace, it will take approximately 3.2 months for existing home inventory to run out. Experts say six to seven months is a healthy pace.
A sign outside a home for sale in Atlanta, Georgia on September 6, 2023. (Ilya Nouberge/Bloomberg via Getty Images/Getty Images)
The supply squeeze is largely driven by the astronomical rise in mortgage rates over the past year. Sellers who locked in low mortgage rates before the pandemic began are reluctant to sell at sky-high rates, leaving eager buyers with few options.
However, borrowing costs have fallen over the past month as many investors believe interest rates are low. federal reserve The aggressive interest rate hike campaign is complete.
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Interest rates on popular 30-year fixed mortgages are currently hovering around 6.6%, according to Freddie Mac, down from a high of 7.79% at the end of October but well above the pre-pandemic average of 3.9%. There is.
