Key takeaways

  • Existing-home sales in December 2023 fell 1 percent from November and 6.2 percent from a year ago, according to the National Association of Realtors.
  • The nationwide median sale price was $382,600, down slightly from November but up 4.4 percent from the previous year.
  • Inventory in December stood at a 3.2-month supply, a level considered a seller’s market.

The housing market continued to challenge homebuyers and reward sellers in December, a new report by the National Association of Realtors (NAR) shows. On the bright side, sales of existing homes — previously occupied properties, rather than newly built homes — could turn around soon, as mortgage rates fell in late December and early January.

“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” said NAR Chief Economist Lawrence Yun. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”

For the full year, existing-home sales were an anemic 4.09 million, the lowest level since 1995. However, the annual median price reached a record high of $389,800.

High mortgage rates have hampered sales and could further squeeze sale activity — however, Yun and others say mortgage rates are unlikely to return to the dreaded milestone of 8 percent we saw in October. Affordability challenges remain daunting, as evidenced by the share of first-time homebuyers falling to 29 percent in December, down from 31 percent in November. “I think the first-time buyer will begin to respond to some of this drop in mortgage rates,” Yun told reporters Friday.

The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates. — Mark Hamrick, Bankrate Senior Economic Analyst

“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained.”

Existing-home sales continue to decline

The existing-home sales statistic counts all completed sales of non-new-construction homes, including single-family houses, condos, townhouses and co-ops. According to NAR, the number of sales nationally fell slightly to an annual pace of 3.78 million homes in December 2023, down from 3.82 million in November 2023.

Sales in the West were up 7.8 percent from a month ago but still down 1.4 percent from a year ago. In the Northeast, sales were unchanged for the month and down 9.6 percent year-over-year. The South fell 2.8 percent from last month and 4.4 percent from last year, while sales in the Midwest dropped 4.3 percent monthly and 10.9 percent annually.

Days on market

Properties typically remained on the market for 29 days in December, up from 25 days in November and 26 days in December 2022. Fifty-six percent of homes sold in December were on the market for less than a month, NAR reports.

Home prices rise for sixth consecutive month

The nationwide median sale price for existing homes in November clocked in at $382,600, up 4.4 percent from December 2022 and the sixth month in a row to record year-over-year increases. In June 2022, the median price hit its highest-ever recorded price at $413,800. The U.S. housing market had been on a remarkable run of 131 consecutive months of year-over-year median sale price increases — the longest-running streak since NAR started keeping records — before dropping year-over-year in February 2023.

Home prices keep marching higher. — Lawrence Yun, Chief Economist, National Association of Realtors

“Home prices keep marching higher,” Yun said. “Only a dramatic rise in supply will dampen price appreciation.”

All four major regions once again saw annual price increases in November. The West continues to have the highest median price by far at $582,000, up 4.8 percent from a year ago. In the Northeast, the median rose 9.4 percent from a year ago to $428,100. The South’s median price rose 3.8 percent to $352,100, and the Midwest’s median rose 5.9 percent to $275,600.

Housing inventory remains low

Total housing inventory — the overall number of homes on the market for sale — sat at 1 million units at the end of December. That’s down 11.5 percent from November but up 4.2 percent from a year ago. And it represents only a 3.2-month supply, which is still well short of the five to six months typically required for a healthier, more balanced market.

The sharp rise in mortgage rates seen this fall has kept many homeowners from selling, which keeps existing homes off the market. Those who locked in rates at 3 percent several years ago aren’t keen on moving while rates are so high.