11 straight months.
That’s a long time when you’re talking about deleterious trends, and in this case the trend in question is existing home sales.
Sales of previously-owned residences dropped again in December, the last of this week’s notable data out of the world’s largest economy showed.
Although the annual rate, at 4.02 million, was ahead of estimates, it wasn’t enough to snap the streak of monthly declines. The range of estimates, from more than five-dozen economists, was 3.79 million to 4.1 million.
Do note: December’s monthly pace counted as the slowest in more than a dozen years.
“December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” NAR Chief Economist Lawrence Yun said Friday. “However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year,” he added.
The data came on the heels of government figures showing single-family housing starts fell last year by the most since 2009, even as construction for one-unit residences picked up last month. Home builder sentiment ticked higher in January for the first time since late 2021, according to the NAHB’s gauge.
On a 12-month basis, existing home sales fell 34% last month, the NAR said.
That was marginally better than November’s YoY drop, but still represented one of the worst declines in modern history.
Price growth has now basically flatlined relative to the explosive increases seen during the pandemic boom. The median price was $366,900 last month, up a comparatively meager 2.3% from the prior year. Inventories fell from November, but were up double-digits from a year ago.
For the full year, existing home sales fell almost 18% from 2021, to 5.03 million. The decline was attributed to sharply higher financing costs.
I’m not sure there’s much utility in additional editorializing. The story is familiar and it hasn’t changed since yesterday’s starts and permits figures.
Yun summed up the outlook pretty succinctly. “Home prices nationwide are still positive, though mildly,” he said. “Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year.”
For many cash-strapped Americans, “discount” is a misnomer.
Until affordability changes, these trends won’t recover. A middling decrease in mortgage rates won’t materially affect affordability. Add that to consumer balance sheets materially weakening and there won’t be much of a reprieve. I do though expect volume based metrics to level off for a bit (9 months or so). However pricing will likely continue to decline even if at a slower pace. I live in the Boston metro. Our home prices went negative as of the December data. I expect the national average to be negative by March at the latest.