A decline in the average mortgage rate last week brought a little hope to homebuyers but purchasing a home in this environment is still challenging.
In its monthly report, the National Association of Realtors (NAR) said sales of existing homes fell for the eleventh straight month. Sales plunged 1.5% from November and were 34% lower than in December 2021.
“December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” said NAR Chief Economist Lawrence Yun. “However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”
Last week the average 30-year fixed-rate mortgage was sharply lower but was 6.23% - still more than double than a year ago.
Declining inventory is another challenge. Not only are there fewer choices for buyers, but it also is keeping prices from going down. In fact, NAR reports the median existing-home price for all housing types in December was $366,900, an increase of 2.3% from December 2021, with home prices rising in all areas of the country. It marks 130 consecutive months of year-over-year increases, the longest-running streak on record.
But there are still deals
That said, all real estate is local and varies from market to market. Where the market is softer – with more properties than buyers – Eddie Martini, the strategic real estate investment advisor at HouseCashin, says there are deals to be had.
“I have experienced buyers being able to close at below asking price, with closing credits as well as sellers buying down mortgage rates,” Martini recently told ConsumerAffairs.
According to NAR, total U.S. housing inventory at the end of December was 970,000 units. That’s a 13.4% drop from the previous month.
Despite the challenging conditions, first-time buyers were more active in the market in December than in November. NAR says first-time buyers accounted for 31% of sales, compared to 28% in November.