As mortgage rates rose to the highest levels in more than 20 years and prices hit record highs, putting homeownership out of reach for many Americans, previously resident U.S. home sales fell to the lowest level in nearly 30 years in 2023.
The National Association of Realtors announced Friday that the total number of existing homes sold in the U.S. last year was 4.09 million, down 18.7% from 2022. This was the lowest year for home sales since 1995 and the largest annual decline since the start of the housing recession in 2007. Late 2000s.
The national median home price rose less than 1% last year to a record high of $389,800, according to NAR.
Mortgage rates will rise sharply in 2023, reaching a 20-year high of 7.08% by late October, as the Federal Reserve continues to raise key lending rates to cool the economy and curb inflation. did.
In addition to years of rising prices, the cost of borrowing a mortgage has skyrocketed, limiting the purchasing power of home hunters. The still low level of home sales also kept many people looking to buy or sell a home on the sidelines.
Mortgage rates have mostly eased since November, reflecting a decline in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Yields fell mainly on expectations that inflation has cooled enough for the U.S. Federal Reserve to cut interest rates by the end of the year.
The average interest rate on a 30-year mortgage this week was 6.6%, according to mortgage buyer Freddie Mac. If interest rates continue to ease, as many economists expect, demand should pick up ahead of the spring home buying season, which traditionally begins in late February.
Still, the average interest rate is still significantly higher than just two years ago, when it was 3.56%. The large difference between current and then-current interest rates deterred homeowners who had locked in the lowest interest rates from selling, and limited the number of previously occupied homes on the market.
Despite easing mortgage rates, existing home sales in December fell 1% from the previous month to a seasonally adjusted annual rate of 3.78 million units, the fastest pace since August 2010, according to NAR.
Sales in December decreased by 6.2% compared to the same month last year. Last month's sales fell short of economists' expectations of about 3.83 million units, according to FactSet.
“Sales have hit a rock bottom in the past month and are likely to inevitably 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.”
Home prices continued to rise last month. According to NAR, the national median home sales price rose 4.4% from the same month last year to $382,600 in December.
