US existing home sales drop to the lowest level since 1995

In December, the housing market experienced its lowest year in almost 30 years when American home sales fell.

According to the data of the National Association of Realtors released Friday (19 January) the closing of contracts dropped by 1 percent to the month before, to 3,78 million annually. The sales for 2023 are expected to be the lowest since 1995.

In the last year, the housing market – which is one of the most sensitive economic sectors to the impact of interest rates was a mess as the Federal Reserve increased borrowing costs at the highest level seen since the beginning of 2000.

Since then, the attention of policymakers has changed towards lower rates. Mortgage rates have dropped from October, after they topped out at about 8 percent. A lot of homeowners are reluctant to move out of their homes in the event that rates decrease.

The last month’s sales are at a low point but they could rise again in the coming year. Mortgage rates have decreased significantly compared to two months ago. In the coming months, there will be more inventory to choose from.

 

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The data this week showed that mortgage applications for homes increased to the highest level since last July. The mood of builders has also improved, which will aid in increasing the supply of new construction.

Last month, the amount of homes available for sale and previously owned decreased to just over 1 million. This is the lowest since March. The current rate of sales would require 3.2 months to sell all properties currently listed on the market. Anything less than five months of supply is considered tight by realtors.

This lack of inventory keeps prices at a high level. In December, the median selling price rose to $382,600 dollars. All four regions saw an increase in price. The prices hit a new record of US$398,800 by 2023.

The majority of homes sold within a month. Properties were available for sale for in 29 days, as opposed to the 25-day period in November.

Based on new projections, which cite the high price of homes relative to income, it will take years for the resale sector to fully recover to its pre-pandemic levels.

The majority of sold are those of homeowners who have already purchased homes. They are based on contract closings. In the coming week, information on new homes sales will be released, which will reflect the signing of contracts.


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