Home sales skidded to a fresh low in 2024 as high mortgage rates and property prices kept buyers and sellers on the sidelines of the housing market.
Americans sold 4.06 million previously-owned homes in the year, the lowest since 1995, the National Association of Realtors said Friday. 2024 marked the third consecutive year in which sales were down, and a big slide from 2021, when 6.1 million homes changed hands.
“The bottom line is that the total cost of homeownership is higher than it has ever been,” said Dan Richards, president of Seattle-based Flyhomes Mortgage. “The challenge for consumers now is that while mortgage rates shot up, prices also stayed elevated. Today, the cost to borrow is higher, and the price tag on the home is higher.”
Sales did perk up in the final quarter of the year: they ran at a rate of 4.24 million in December, which was 9.3% faster than in December 2023.
And with the supply of homes still too low to meet demand, prices continue to surge. In December, the median national sales price was $404,400, up 6% from a year earlier. At $407,500, the median price for all of 2024 marked a new record.
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It would take 3.3 months to exhaust the available supply of homes on the market if sales continued at December’s pace. That’s about half the long-time average of six months of supply.
Mortgage rates still high at the start of 2025
The housing market faces stiff headwinds in 2025.
Mortgage rates rose in each of the first three weeks of January, and hover near 7%. Many market observers expect Washington policies to keep upward pressure on inflation and borrowing costs.
The Redfin Homebuyer Demand Index, a measure of tours and other buying services from agents, is near its lowest level since June, the national brokerage said in an email release on Thursday. It’s taking more time for homes to sell, Redfin said: at an average of 52 days, it’s the longest in two years.
That sluggishness is also evident in surveys of consumer sentiment. The well-regarded Fannie Mae Home Purchase Sentiment Index fell in December, although it was higher than the year earlier, the mortgage guarantor said earlier in January. That’s “due in part to ongoing mortgage rate optimism,” Fannie economists said in a release.
“While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in homebuying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions,” the release noted.
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Richards, of Flyhomes, agrees, and expects activity to pick up in 2025.
“There’s both a practical and a psychological shift that needs to happen,” he said. “As we get further away from the days of 3% rates, mortgage rates in the 6-7% range will start to feel more ‘normal.’”
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