Existing-home sales picked up
Existing home sales improved in December, rising 2.2% to a pace of 4.24 million home sales. Importantly, this was a third straight year-over-year gain after a streak of declines stretching back to August 2021, and a sizable uptick of 9.3%. Mortgage rates were already climbing higher in October and November when these homes with December closings generally went under contract. While some December buyers likely rushed to close before mortgage rates surged even higher, others may have simply acclimated to a new, and higher, normal. As mortgage rates have remained relatively high, home sales in the months ahead will indicate which is the bigger factor.
While the improvement is something to celebrate, the December data caps a year where home sales did not live up to expectations. In fact the annual sales total for 2024 was 4.06 million, down from 4.09 million in 2023, marking the most sluggish year for existing home sales since 1996. The strength of the December uptick will be tested in the months ahead, but does open the possibility that the bottom in existing home sales is truly in the rearview mirror.
Home prices rose despite seasonal expectations
The median home sales price rose 6.0% compared to one year ago, and remained at $404,000 in December, showing seasonally atypical resilience.
What does this mean for prospective buyers?
A recent Realtor.com survey found that homeownership continues to be an important facet of the American Dream. But high home prices, elevated mortgage rates, and rising costs of other goods and services from groceries to gasoline continue to squeeze household budgets and make the dream of homeownership seem far out of reach for some. Rising homeowner’s association fees, a common feature of smaller homes like condos and townhomes, can push what would otherwise be an in-budget starter home into unaffordable territory. Nevertheless, buyers persist. Despite the challenges, a strong desire for homeownership is one of several factors expected to drive a modest uptick in home sales this year according to the Realtor.com 2025 Housing Forecast.