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US home sales slowed for the 11th month in December high mortgage ratesInflation and high housing prices reduced consumer demand from the housing market.
Sales of existing homes fell 1.5% in December from the previous month to an annual rate of 4.02 million units, according to new data released Friday by the National Association of Realtors (NAR). Annually, home sales are down 34% compared to December 2021.
This was the slowest pace since November 2010, when the US was still in the midst of a catastrophic mortgage crisis.
FILE – A for sale sign stands in front of a home on October 6, 2020, in Westwood, Massachusetts. (AP Photo/Steven Senne, File/AP Newsroom)
“December was another tough month for consumers, who continue to face limited inquiries and high mortgage interest rates,” NAR chief economist Lawrence Yun said in a statement. . “However, expect to pick up sales again as mortgage rates have fallen sharply since peaking at the end of last year. “
About 970,000 homes were sold at the end of December, according to the report, which is a decrease of 13.4% from November but reached 10.2% from last year. Homes sold in an average of 26 days, up from 24 days in November and 19 days last year. Before the pandemic, homes usually sit on the market for about a month before selling.
At the current pace of sales, it takes about 2.9 months to clear the existing home inventory. Experts see six to seven months as a healthy pace.
The interest-interest-sensitive housing market has borne the brunt of the Federal Reserve’s austerity measures tighten policies and slow the economy.
Home in the Harris Ranch community of Boise, Idaho, US, on Friday, July 1, 2022. (Jeremy Erickson/Bloomberg via Getty Images/Getty Images)
Policymakers have already raised the federal funds rate seven times in 2022 and have indicated they plan to continue raising rates this year as they try to reduce the cost of the economy which is still high.
However, mortgage rates continue to fall from the high of 7.08% recorded in November. The ratio is a 30 year fixed mortgage fell to 6.15% this week, according to data from mortgage lender Freddie Mac. However, the rate remains higher than a year ago, when the rate rose to 3.56%.
However, even if interest rates are high enough to put homeowners on hold for millions of Americans, prices are still higher than they were a year ago. The average price of current homes sold in December was $372,700, an increase of 2% from the same time last year. This marks the 130th consecutive month of year-over-year home price increases, the longest streak on record.
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Prices, however, have eased slightly after peaking at $413,800 in June.
“The housing market is reeling from years of construction, economic uncertainty, and high interest rates,” said Jeffrey Roach, chief economist at LPL Financial, adding from: “Because of these factors, housing affordability is the lowest it has been since the mid-1980s.”