Existing home sales fell for an 11th straight month in December, the slowest pace since November 2010

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Homes in Rocklin, California, U.S., on Tuesday, December 6, 2022. A record number of homes are being delisted as sellers face a sharp drop in demand, according to brokerage firm Redfin.

David Paul Morris | Bloomberg | Getty Images

Existing home sales fell 1.5% in December from the previous month, according to the National Association of Realtors.

Sales ended the year at a seasonally adjusted annualized rate of 4.02 million units, which was 34% lower than in December 2021. It is the slowest pace since November 2010, when the country struggled with a housing crisis triggered by flawed subprime mortgages.

Total sales for the year were down 17.8% from 2021.

Home sales have now fallen for 11 consecutive months, due to much higher mortgage rates, which started to rise last spring and more than doubled by the fall. Skyrocketing prices, driven by strong demand during the early years of the pandemic, further weakened affordability and caused supply to plummet.

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“December was another tough month for buyers, who are still dealing with limited inventories and high mortgage rates,” said Lawrence Yun, chief economist for the Realtors. “However, expect sales to pick up soon as mortgage rates have fallen significantly from a peak late last year.”

Mortgage rates have fallen by a full percentage point since their peak in October last year, but are still about double what they were a year ago.

At the end of December, the total housing stock fell by 13.4% compared to November to 970,000 units. However, it was 10.2% higher than in December last year. Unsold inventory has 2.9 months of inventory at the current sales rate, down from 3.3 months in November but up from 1.7 months in December 2021.

The low supply continues to support prices to some extent, but profits are shrinking compared to a year ago. The median price of an existing home sold in December was $366,900, up 2.3% from the year before. It’s still the highest price recorded in December, but annual price increases were in the double digits last summer.

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“Markets in about half of the country are likely to offer potential buyers lower prices than last year,” Yun added.

The problem, however, is that sellers are not entering the market given falling prices and weaker demand. The total stock is higher than a year ago because homes have been on the market for longer. New listings in January are down year over year.

“Declining demand has put an end to the strong seller’s market of recent years, and still-declining home sales tell us that many buyers still cannot afford to buy or are not yet convinced that the market is sufficiently in their favor The housing market is entering “no-man’s market” territory as buyers and sellers remain largely in a stalemate,” said Danielle Hale, Realtor.com’s chief economist.

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New buyers continue to struggle in the current market, accounting for just 31% of sales in December. While this is an increase from the 30% in December last year, it is a far cry from the historical norm of 40%.

The market continues to slow, with homes on the market for an average of 26 days, compared to 24 days in November and 19 days in December 2021.

All-cash sales rose to 28% of transactions from 23% the year before and investors accounted for 16% of sales, slightly down from 17% the year before.

Although sales are falling in all price categories, they are falling most sharply at the top end. Sales of homes priced over $1 million fell 45% year over year, compared to sales of homes priced between $250,000 and $500,000, which fell 34%. Yun suggested weakness to the upside may be due to volatility in the stock market.

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