By Manuel Gutierrez, Consulting Economist to NKBA
Inflation and high mortgage interest rates still appear to be battering sales of existing homes, which closed out 2022 with a 1.5 percent drop in December. This continues the downward spiral of the previous 11 straight months, to an annual rate of 4.02 million homes. Sales are at their lowest level in 12 years, and are down by more than a third from December 2021.
- The sharp housing collapse exceeds any falloff in this century; During the subprime housing crisis in 2006-2009, it took over two years for housing to fall by that amount.
- The year-over-year plunge was felt across all four regions in the U.S. Annual sales were down 43 percent in the West to 690,000 units; off 33 percent in the South to 1.8 million homes; down 30 percent in the Midwest to just over 1 million units, and off 29 percent in the Northeast to an annual pace of 520,000 homes.
- Inventory of homes available for sale shrunk in December to 860,000 homes, just sufficient to cover 2.9 months of sales — the lowest in six months.
- Home prices have virtually stagnated, as the median price of an existing home in December was $373,000, up just 1.5 percent YOY. This is a dramatic change from just a few months ago, when house prices were clocking annual gains of 22 percent.