Sales of existing homes in the U.S. fell to the lowest level in nearly three decades last year, driven by sky-high home prices and elevated mortgage rates that discouraged potential buyers. The National Association of Realtors reported that 4.06 million existing-home sales occurred in 2024—a figure marking a new low since 1995. Despite some momentum at the end of the year, with sales rising 2.2% in December to 4.24 million units (seasonally adjusted annual rate), the market remains fragile.
Mortgage rates reached a peak of 7.22% last year before declining slightly and then climbing again this week. Freddie Mac noted that home prices have risen steadily, with the median price hitting $407,500 in 2024—a record high. However, buyers are struggling to keep up as rates remain elevated, even as home prices hover near unprecedented levels.
The housing market may not improve much this year, with mortgage rates expected to stay above 6% through 2026. High borrowing costs and a lack of new homes available are key challenges. Inventory has slightly increased throughout 2024 but remains insufficient to meet demand, with a reported shortage of nearly 3.7 million units according to Freddie Mac.
The so-called “lock-in effect” continues to play a role, as homeowners who locked in low rates before the Federal Reserve began hiking interest rates in 2022 prefer not to sell homes now due to rising rates. Meanwhile, some homebuyers sold their existing homes last year amid life events like births or marriages, contributing to inventory growth.
Looking ahead, builders remain optimistic about a potential rebound in housing supply if deregulation is implemented, but concerns about future mortgage rate hikes and the impact of tariffs from the Trump administration persist. The market faces an uphill battle as home prices remain near all-time highs, making new purchases increasingly unaffordable for many buyers.
Source: https://edition.cnn.com/2025/01/24/economy/us-home-sales-worst-year-in-three-decades/index.html