Existing home sales showed signs of improvement in December, rising 2.2 percent to a seasonally adjusted annual rate of 4.24 million homes sold. This marks the third consecutive year-over-year increase, a notable recovery after a prolonged downturn that began in August 2021. Compared to the previous year, sales were up 9.3 percent, indicating that buyers may be adjusting to higher mortgage rates rather than waiting for a significant drop.
The homes sold in December were largely put under contract in October and November, when mortgage rates were already climbing. While some buyers may have hurried to close before rates increased further, others appear to have accepted the reality of sustained higher borrowing costs. In the coming months, the housing market will reveal whether recent sales momentum continues or if affordability constraints slow progress.
A Year of Struggles Despite December Gains
Despite the late-year rebound, 2024 as a whole fell short of expectations. Annual home sales totaled 4.06 million, slightly down from 4.09 million in 2023, making it the slowest year for existing home sales since 1996. While the December increase offers hope, the real test will be whether the market can sustain or build on these gains in early 2025. If so, it could signal that the market downturn is finally in the past.
Home Prices Defy Seasonal Trends
Typically, home prices dip toward the end of the year due to seasonal slowdowns, but December defied that pattern. The median home sale price remained at 404,000 dollars, reflecting a 6.0 percent increase from the previous year. The resilience of home prices suggests that demand, while tempered by high mortgage rates, remains strong enough to prevent widespread price declines.
What This Means for Buyers
For many prospective buyers, homeownership remains a cornerstone of the American dream, but affordability continues to be a major hurdle. High home prices, rising mortgage rates, and increasing costs for everyday essentials such as groceries and gas have put additional strain on household budgets. Even smaller homes, such as condos and townhomes, often come with rising homeowner association fees, pushing once-affordable properties out of reach.
Still, buyers remain determined. According to the Realtor.com 2025 Housing Forecast, the strong desire for homeownership is expected to drive a modest increase in home sales this year. While challenges persist, those looking to buy in 2025 may find slightly more opportunities, especially if mortgage rates stabilize or inventory levels improve.