Late-year gains fail to push home sales above 2023 levels
Despite an uptick in December, existing home sales ended the year at just over 4 million, the lowest rate since 1995.
The housing market seemed to be making a last-ditch effort to pull ahead in December, but it wasn't enough to keep 2024 from being the slowest year in three decades for existing home sales.
Sales were up 2.2% from November, according to data released Jan. 24 by the National Association of Realtors, and jumped 9.3% from December 2023 — the largest year-over-year gain since June 2021.
While that pushed annual sales above the 4 million mark to end the year at 4.06 million — just shy of last year's 4.09 million — they remained at the lowest level since 1995. Persistently high mortgage rates and a lack of inventory continued to be the main constraints on the U.S. housing market in 2024, said Lisa Sturtevant, chief economist at Bright MLS.
Historically sluggish: The slowdown in existing home sales that began in 2022 is fairly remarkable given that sales topped 6 million as recently as 2021 and were just above 5 million in 2022. It's an echo of the Great Recession, when existing home sales abruptly slowed from around 7.1 million in 2005 to 4.1 million in 2008. Sales didn't top 5 million again until 2013.
Over the past decade, the U.S. has averaged around 5.2 million annual home sales.
"It is going to take years before we are back at that level, maybe not even until the 2030s," Sturtevant said, noting that inventory is the key constraint.
The mortgage rate lock-in effect has been more persistent than many economists expected, discouraging homeowners from selling. Moves related to life events, like a change in family status or employment, have increased inventory, but it still remains well below pre-pandemic levels.
A sign of what's to come? The late-year bump in home sales, despite mortgage rates rising throughout the second half of December, has provided some optimism for this spring.
"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," said Danielle Hale, chief economist at Realtor.com.
Inventory down, prices up: NAR reported that inventory fell 13.5% between November and December — a typical seasonal slowdown — but was up 16.2% compared to a year ago. Nationally, supply rose to 3.3 months, up from 3.1 months a year ago but still well below the balanced market level of 4-6 months.
With inventory still in sellers market territory, home prices have continued to rise. The median price of existing homes sold was $407,500 in 2024, a record high.