Home Blog Uncategorized December Home Sales Mark Worst Year Since 1995
December Home Sales Mark Worst Year Since 1995

December Home Sales Mark Worst Year Since 1995

In December, sales of previously owned homes experienced a 1% decline compared to November, reaching 3.78 million units on a seasonally adjusted annualized basis, according to data from the National Association of Realtors (NAR). This figure marks a 6.2% decrease from December 2022, reaching the lowest level since August 2010, and contributes to the full-year sales for 2023 amounting to 4.09 million units, the lowest recorded since 1995.

Regionally, monthly sales remained unchanged in the Northeast, declined by 4.3% in the Midwest, were down by 2.8% in the South, and rebounded by 7.8% in the West. On a year-over-year basis, sales declined across all regions. The count of home closings is based on contracts likely signed in late October and November, during a period when mortgage rates were significantly higher than the current rate of 6.89%, as reported by Mortgage News Daily, having fallen from about 8% in October. Lawrence Yun, NAR’s chief economist, anticipates a potential rebound in the new year, attributing the recent sales dip to higher mortgage rates, which have now decreased, and the expectation of increased inventory in the coming months.

Despite a decline of 11.5% in inventory from November to December, inventory levels rose by 4.2% compared to December 2022. With 1 million homes for sale at the end of December, the supply represents a 3.2-month pace at the current sales rate, below the balanced six-month threshold for buyer-seller equilibrium.

The tight supply continues to drive home prices higher, with the median price reaching $382,600 in December, reflecting a 4.4% increase from December 2022. This marks the sixth consecutive month of year-over-year price gains, culminating in a record-high median price of $389,800 for the full year.

Homes stayed on the market longer in December, averaging 29 days, up from 25 days in November. The share of all-cash sales rose to 29% from 27% in November, while individual investors, comprising a significant portion of all-cash sales, purchased 16% of homes, down from 18% in November. The pullback in investor activity may provide a positive outlook for buyers, as both higher home prices and increased financing costs contributed to fewer investor home purchases in 2023, according to a Realtor.com study.

However, first-time buyers continue to face challenges, constituting only 29% of December sales, down from 31% the previous year and significantly below the historical average of 40% in the market. Despite the hurdles, potential first-time homebuyers remain optimistic in approaching the 2024 market, even as they contend with the challenges of buying a home below the median price point often targeted by investors.

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