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For the 11th month in a row, existing-home sales have declined. According to the National Association of Realtors (NAR), every sales region in the country experienced year-over-year drops in sales in December. Month-over-month sales, however, were more variable, with three regions recording declines and one—the West—remaining stable. According to NAR Chief Economist Lawrence Yun, December’s limited inventory and high mortgage rates contributed to the difficulties buyers faced. However, “expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year,” he added. All-cash sales are up, representing 28% of all transactions in December, up from 26% a month ago and 23% a year ago. According to Yun, “Cash buyers are unaffected by fluctuations in mortgage rates and were able to take advantage of lower prices in some areas.”
Home Prices and Inventory Levels
At the end of December, there were 970,000 units available in the housing inventory, down 13.4% from a month ago but up 10.2% from December 2021, when there were only 880,000 units available. At the current sales pace, unsold inventory would supply the market for 2.9 months, down from a 3.3-month supply recorded a month ago but up from a 1.7-month supply a year ago. The slight easing in inventory levels impacted the amount of time properties typically remained on the market, which in December reached 26 days, up from 24 days in November and 19 days a year ago. Of all the homes sold in December 2022, 57% were available for less than one month. Home prices were also impacted by inventory levels; though December marked the 130th consecutive month of year-over-year price increases, gains were mild. The median existing-home price for all housing types reached $366,900, up 2.3% from December 2021. Every sales region recorded price increases, though, as Yun noted, “Markets in roughly half the country are likely to offer potential buyers discounted prices compared to last year.”
Who’s Buying Homes?
First-time buyers represented 31% of all buyers in December, up from 28% a month ago and 31% a year ago. According to the NAR “2022 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 26%, the lowest on record. Individual investors and second-home buyers—two groups that account for many cash sales—were responsible for 16% of sales, up from 14% in November but down from 17% in December 2021. Only 1% of all sales in December 2022 were distressed (foreclosures and short sales), unchanged from both a month ago and a year ago.
Regional Breakdown
Northeast: Existing-home sales annual rate of 520,000; a decrease of 1.9% from November 2022 and 28.8% from December 2021. The median sales price of $391,400 increased by 1.6% from December 2021.
Midwest: Existing-home sales annual rate of 1.01 million; a decrease of 1% from November 2022 and 30.3% from December 2021. The median sales price of $262,000 increased by 2.9% from December 2021.
South: Existing-home sales annual rate of 1.8 million; a decrease of 2.2% from November 2022 and 33.1% from December 2021. The median sales price of $337,900 increased by 3.5% from December 2021.
West: Existing-home sales annual rate of 690,000; unchanged from November 2022 but a decrease of 43.4% from December 2021. The median sales price of $557,900p increased by less than a tenth of a percent—the equivalent of $200—from December 2021.
