Sales of previously owned homes in the United States fell in December, the sixth decline in the last seven months, confirming 2023 as the worst year for home sales since 1995.
The demand for homes remains very strong, despite high interest rates. But because many owners would be giving up low-interest rate mortgages if they sold, they have been reluctant to put their homes on the market.
This has boosted home construction and new home sales but depressed the much larger market for existing homes.
It has also pushed up home prices, surprising many analysts who thought higher interest rates would depress home price appreciation. In December, the median sales price reached a record high of $389,800 in 2023.
Sales of existing homes are measured by the National Association of Realtors when they close, typically a month to two months after purchase deals are signed. So the December closings are for sales signed in November and October, when interest rates were well above 7 percent and touched eight percent at their peak. Since then, mortgage rates have declined significantly.
Sales fell by one percent from a month earlier to an annualized and seasonally adjusted rate of 3.87 million, according to the National Association of Realtors.
Sales for all of 2023 sales fell to 4.09 million, the lowest level since 1995. That figure is not adjusted for the number of homes in the U.S. or the population, both of which have climbed significantly.
The inventory of unsold existing homes fell 11.5 percent from the previous month to 1 million at the end of December, or the equivalent of 3.2 months’ supply at the current monthly sales pace. Compared with a year ago, however, inventory is up 4.2 percent.