US existing home sales fell in the final month of 2023, ending a tough year for real estate as full-year sales hit the lowest level since 1995, said industry data released Friday.
For all of last year, sales of existing homes, which form the vast majority of the market, came in at 4.09 million, said the National Association of Realtors (NAR).
This was significantly below 2022’s 5.03 million figure, as the interest-sensitive real estate sector struggled in the wake of rapid interest rate hikes by the Federal Reserve.
The median sales price also reached a record high of $389,800 in 2023, said the NAR.
Between November and December, sales of all types of homes and condos dipped 1.0 percent, to a seasonally adjusted annual rate of 3.78 million, the NAR said.
This marks the lowest sales activity in more than a decade.
The aim of central bank interest rate hikes since early 2022 was to cool demand by raising borrowing costs, so as to tamp down stubborn inflation.
But even as inflation cooled from a peak in recent years, Fed officials held rates at a 22-year high to ensure the battle is won.
Meanwhile, a lack of inventory has bogged down the property market further, with homeowners reluctant to sell after having locked in lower mortgage rates.
NAR chief economist Lawrence Yun believes that “the latest month’s sales look to be the bottom before inevitably turning higher in the new year.”
“Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months,” he said.
The popular 30-year fixed-rate mortgage averaged 6.6 percent as of Thursday, below the 7.8 percent in late October, according to home loan finance company Freddie Mac.
There may be further reprieve ahead, with the Fed mulling the right time to cut rates and signaling three reductions this year.
“Falling mortgage rates in late 2023 did little to boost housing activity as widespread supply limitations continue to thwart purchases,” Nationwide senior economist Ben Ayers said.
“The housing outlook for 2024 remains muddled with mortgage rates likely to be elevated while an expected economic slowdown could dampen buyer demand,” he warned.
In December, the median home price across housing types was $382,600, up 4.4 percent from the year-ago period.
While home prices tend to be higher in the summer months, “this is the highest December median home price ever,” Yun said on Friday.
“Despite the weakness in home sales, the lack of supply is naturally firming up home prices,” he added.
