:max_bytes(150000):strip_icc()/GettyImages-2157834140-2d734805feec436c84b546db1326bfd5.jpg?w=696&resize=696,0&ssl=1 "Existing Home Sales Plummet to a Multidecade Low: What’s Behind Economists’ Optimism for the Housing Market?")
:max_bytes(150000):strip_icc()/GettyImages-2157834140-2d734805feec436c84b546db1326bfd5.jpg?w=1200&resize=1200,0&ssl=1&description=Existing+Home+Sales+Plummet+to+a+Multidecade+Low%3A+What%E2%80%99s+Behind+Economists%E2%80%99+Optimism+for+the+Housing+Market%3F){kind=link}
Photo credit: www.investopedia.com
Housing Market Trends: December Gains Amid Historical Low Sales
Key Takeaways
Recent data from the National Association of Realtors indicates a resurgence in the housing market as December saw a favorable uptick. However, the total number of existing home sales for the year reached its lowest level since 1995. This late-year rebound raises hopes among economists for a sustained improvement extending into 2025, despite mortgage rates climbing toward 7%, signaling that buyers may be adjusting to elevated borrowing costs.
The momentum observed in December showcases a potential shift in the housing landscape, though the year-end figures for existing home sales remained relatively subdued due to elevated prices scaring away potential buyers.
In total, existing home sales reached 4.06 million for the past year, as reported by the National Association of Realtors. This figure represents a significant decline, marking the lowest level seen since 1995. Contributing to this downturn were soaring median home prices, which have hit an all-time high of $407,500 in 2024, according to NAR statistics.
Additionally, Freddie Mac reported that 30-year fixed mortgage rates hovered primarily above 6.5% throughout the year, exacerbating affordability challenges for buyers in the market.
Economists at Wells Fargo, including Charlie Dougherty, Jackie Benson, and Ali Hajibeigi, shared insights indicating optimism for the upcoming year. They suggested that 2023 could be recognized as a low point for existing home sales, with positive momentum likely to carry over into 2025.
The trio of economists expressed a brighter outlook for the housing market as both buyers and sellers are inclined to engage more actively, boosted by a strong labor market and increasing wage growth in recent months. This scenario might encourage participants to return to the market despite heightened interest rate concerns. Supporting this perspective, NAR data revealed a noteworthy increase of over 16% in the number of homes available on the market in December compared to the previous year.
Observing the current dynamics, BMO Senior Economist Priscilla Thiagamoorthy noted that the rise in available properties might reflect a growing acceptance among buyers and sellers towards adapting to the current high-interest rate environment, particularly as the 30-year fixed mortgage rate approaches 7%.
Source
www.investopedia.com