Home prices reached a record high last year | economics

The real estate market took a downward turn in 2022, as rising interest rates quickly slowed the frantic sales activity we saw the previous year – but home prices still hit a record high.

The median home sale price in 2022 was $386,300, up 10.2% from 2021 and the highest on record, according to data from the National Association of Realtors released Friday.

Meanwhile, home sales posted their weakest year since 2014, with 5.03 million homes sold, down 17.8% from a year earlier. It was the biggest annual decline in sales since 2008, when the market was in the throes of a housing crisis.

Existing home sales — which include single-family homes, townhouses, condominiums and co-ops — fell for the 11th consecutive month in December, even as mortgage rates rose. which was more than 7% in November Get down a bit. Buyers have been turned away from the market by high prices and rates are still double what they were a year earlier.

In December, sales were down 1.5% from November and down 34% from a year ago. All regions of the country experienced year-over-year sales declines, and three regions experienced month-to-month declines, with the West unchanged.

But prices continued to rise in December, with an average price of $366,900, up 2.3% from a year ago, and the smallest gain in prices since the May 2020 lockout period. The price increase points to more than a decade on a year-over-year basis. monthly earnings.

“December was another tough month for buyers, who are still facing limited inventory and high mortgage rates,” said Lawrence Yoon, chief economist at NAR. However, expect sales to pick up again soon, since mortgage rates Significantly decreased after peaking late last year.”

A “transitional year” for real estate

After the real estate boom in 2021, fueled by some of the lowest mortgage rates on record, rising 2022 rates slashed demand and slowed home price growth. Now, the housing market is moving into something closer to normal next year, experts say.

“After sales boomed in 2021, 2022 was a transition year in which sales declined significantly,” Yoon said. “We know there are concerns about the housing market downturn and declining sales, but prices are rising for the year.”

While the 10% increase in median home prices over the year was less than the 17% annual gain in 2021, price increases contracted monthly through 2022 with the annual price increase of 15.4% in January dampening ​Price growth in December by 2.3%. from the previous year.

“The price gains in December are close to 0%, which means half of the country is seeing some kind of price declines and the other half is seeing price increases,” Yoon said. Areas where prices have seen the biggest price jumps over the past few years—-Phoenix; Austin, Texas; And Las Vegas – these are also the places where prices go down the most.

From the end of pre-Covid 2019 to the end of 2022, average prices increased 42%, Yoon said, resulting in a $114,000 increase in housing wealth for the average homeowner.

But, he added, for those without a home, home prices have risen much faster than income. This presents affordability challenges for many potential buyers.

Robert Fricke, an economist with the Navy Federal Credit Union, said the December existing home sales report hit a losing triplet of declining sales, declining inventory and rising prices.

The only bright spot, he said, was that house prices in December rose just 2.3% from a year earlier.

“In many markets, we’re seeing home prices fall from inflated levels, which presents an opportunity for some potential buyers,” Frick said. “However, while mortgage rates have fallen a full percentage point to around 6%, that level is still too high to encourage more listings and more buying.”

Low inventory continues to spoil homebuyers

While the inventory was higher in December than a year ago, the total housing stock is still less than 1 million units, which is historically low.

Properties have typically been on the market for 26 days in December, up from 24 days in November and 19 days in December 2021, according to the NAR. More than half of homes sold in December 2022 have been on the market for less than a month. This is still, historically, a fast market, without an abundance of available homes.

The inventory of homes for sale is still very low because many would-be home sellers are reluctant to part with the extremely low mortgage rate they have purchased or refinanced over the past few years.

As of the third quarter of 2022, the vast majority of outstanding mortgages had a rate of 6% or less, according to Mark Fleming, chief economist at First American.

“This leaves many existing homeowners in a position where it would cost more to borrow the same amount of money they owe on their existing mortgage, preventing them from putting their homes up for sale and adding supply to the market,” Fleming said.

“The good news is that new home inventory is on the rise, and total inventory usually goes up as the spring season approaches,” he said. “The residential housing market experienced a severe freeze in the winter months of 2022, but there is reason to believe it will begin to thaw as the spring home buying season approaches.”

CNN Wire

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