LOS ANGELES (AP) — The latest evidence that homeownership is becoming increasingly accessible to many Americans: Sales of previously occupied U.S. homes closed last year for the second time in as many years. It fell to a nearby low.
Rising mortgage ratesa year-long shortage of homes on the market and record house prices It continued to deter prospective home shoppers, especially first-time buyers.
As such, existing home sales fell 0.7% last year, the weakest showing for home sales since 1995 and robbed 2023 of a terrible year of sales, the National Association of Realtors said Friday.
Even amid a sales slump, a lack of homes on the market and rising mortgage rates gave sellers an advantage over buyers, helping drive home prices nationwide to an all-time high of $407,500 last year. . 4.7% of the previous year.
“Given that the U.S. population has grown by more than 70 million people over this period from 1995 to today, is it possible that home sales could be this low?” asked NAR Chief Economist Lawrence Yun . “We can partially answer that question because of affordability issues. We’ve had record home prices, mortgage rates have gone up, but we also have a lack of inventory.”
The U.S. housing market is in a sales recession dating back to 2022, when mortgage rates began rising from pandemic-era lows. The average rate for a 30-year mortgage jumped to a 23-year high of nearly 8% in October 2023, briefly declining last September, but Mainly hovering around 7%, According to mortgage buyer Freddie Mac.
The purchasing power of Americans facing higher costs of borrowing money for homes that have appreciated in value has been significantly inhibited. With so few homes for sale, millions of home buyers are sitting on the sidelines.
At the end of December, there were just 1.5 million homes on the market, Nar said. Data dating back to 1999 showed inventories were up 16.2% from a year earlier, but well below the annual average of about 1.98 million.
Inventory available at the end of last month, at current sales pace, equates to 3.3 months of supply. A more balanced market between buyers and sellers has 4-6 months of supply.
“This means that the problems in the U.S. housing market continue to worsen in terms of the availability of homes for sale and upward pressure on home prices,” said Raymond James, Chief Economist. one Eugenio Aleman writes in his research notes.
Many factors contribute to the housing shortage. These include below-average new home construction over 10 years and homeowners staying longer. And while President Donald Trump has made increasing housing supply one of his campaign platforms, there are no easy fixes.
“Over the past decade, the United States has averaged approximately 5.2 million home sales per year,” said Lisa Sturtevant, chief economist at Bright MLS. “It will be many years before we get back to that level, probably not even until the 2030s. Lack of inventory is a key constraint.”
A sharp decline in mortgage rates increased Americans’ purchasing power in 2020 and 2021. Many economists expect average rates on 30-year mortgages to ease this year, but they generally don’t expect them to fall below 6%. About twice as many as five years ago.
When mortgage rates are eased, they can encourage home shoppers. Last fall’s rate pull helped home sales increase each month in the final three months of the year.
Home sales in December reached a pace of 4.24 million, up 2.2% from the previous month on a seasonally adjusted basis, according to NAR. This exceeded the 4.2 million pace forecast by analysts polled by FactSet. Sales increased 9.3% in December, the same month last year.
The median home sales price rose for the 18th consecutive month in December to $404,000, an increase of 6% from a year ago.
Limited inventory can help drive prices higher, especially in the more affordable price ranges of certain markets. That’s one reason many first-time homebuyers who don’t have the home equity toward a down payment continue to struggle.
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%. Historically it was 40%.
