Sales of previously owned homes in the United States plunged to a nearly 30-year low in 2024, marking the second consecutive year of decline. High mortgage rates, rising home prices, and a shortage of available properties continue to dampen the market.
Sales of previously occupied U.S. homes plunged in 2024 to their lowest point in nearly 30 years, marking the second consecutive year of declining sales. This downturn is driven by a trifecta of challenges: soaring mortgage rates , escalating home prices , and a severe shortage of available properties. The National Association of Realtors (NAR) reported on Friday that existing U.S. home sales totaled 4.06 million last year, a 0.7% decline from 2023.
This figure represents the weakest year for home sales since 1995, mirroring the full-year results from 2023.The median national home price for all of 2024 climbed 4.7% to a record high of $407,500, according to the NAR. The U.S. housing market has been grappling with a sales slump since 2022, when mortgage rates began a steep ascent from their pandemic-era lows. The average rate on a 30-year mortgage surged to a 23-year high of nearly 8% in October 2023 before briefly dipping to a 2-year low last September. However, it has largely remained around 7%, as reported by mortgage buyer Freddie Mac. These elevated home loan borrowing costs have constrained the purchasing power of potential homebuyers, further exacerbated by years of rapidly increasing prices.Adding to the woes, a scarcity of homes for sale has propped up prices, leaving many prospective buyers and sellers on the sidelines. At the end of December, there were only 1.15 million homes on the market, a far cry from the monthly historical average of roughly 2.25 million, according to the NAR. This limited inventory translates to a 3.3-month supply, based on the current sales pace. In a market characterized by a balance between buyers and sellers, a 4- to 6-month supply is considered typical. Despite these headwinds, December 2024 witnessed a glimmer of hope with home sales rising 2.2% from the previous month on a seasonally adjusted basis, reaching an annual pace of 4.24 million. This marked the third consecutive month of sales growth and surpassed the 4.2 million pace projected by analysts polled by FactSet.On a year-over-year basis, sales surged 9.3% in December. The median home sales price continued its upward trajectory, reaching $404,000 in December, up 6% from the previous year. This 18th consecutive month of price increases underscores the limited inventory, particularly in more affordable price ranges, which fuels price escalation. This dynamic presents a significant challenge for first-time homebuyers who lack the home equity to contribute towards a down payment, hindering their ability to enter the market. They constituted 31% of all homes sold last month, an increase from 30% in November and 29% in December 2023. However, their annual share remained at 24%, significantly below the historical average of 40%
US Housing Market Home Sales Mortgage Rates Home Prices Inventory Shortage
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