Homebuying fell to a three-decade low last year

The US housing market and Eeyore – both are down in the dumps. Existing home sales in 2024 turned in their weakest year in nearly thirty years, the National Association of Realtors said Friday.

• Existing home sales fell 0.7% last year to 4.06 million, the weakest showing since 1995, when the US had ~70 million fewer people.
• Annual existing homes sales traditionally clock in around 5 million.

Prices higher than the lost balloons in Up

A supply/demand mismatch driven by low inventory – a 3.3-month supply at the current sales pace (vs. 4-6 months in a more balanced market) – has helped drive home prices to a record high. The median home sales price in 2024 was $407,500, up 4.7% year over year.

In addition to high prices, elevated mortgage rates (~7%) have kept prospective buyers on the sidelines – whether to maintain their existing, less-expensive mortgage or for affordability reasons.

First-time homebuyers are especially affected. The annual share of homebuyers ditching the shared walls and noisy ceilings of an apartment last year was 24%, the lowest on record.

🤔 More trouble in 2025? While the housing market has some momentum heading into the New Year – existing-home sales increased in December for the third straight time on a monthly basis, which hasn’t happened since 2021 – sales are still well below historical levels. Mortgage rates are also expected to remain above 6% this year.