Higher mortgage rates have dampened demand for existing homes in the United States.
Data from the National Association of Realtors released Tuesday shows that sales were down 6.4% month-over-month and 10.3% year-over-year to a seasonally adjusted rate of 4.99 million in December.
“The housing market is obviously very sensitive to mortgage rates,” said NAR chief economist Lawrence Yun. “Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today. Now, with mortgage rates lower, some revival in home sales is expected going into spring.”
Prices continued higher with the median existing home price up 2.9% year-over-year to $253,600.
Inventory tightened to 3.7 months of supply with 1.55 million homes available, down from 1.74 million in November.
“Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home price appreciation,” said Yun. “But there is still a lack of adequate inventory on the lower-priced points and too many in upper-priced points.”
Government shutdown
The US government shutdown may start to have an impact on sales says NAR president Jon Smaby.
“The partial shutdown of the federal government has not had a significant effect on December closings, but the uncertainty of a shutdown has the potential to harm the market. Once the government is fully reopened, I am hopeful that housing transactions will increase.”
