Homebuyers Backing Out of Deals – Record Pace Since 2017
- The US housing market is facing headwinds, with existing-home sales declining and cancellations rising, perhaps signaling a weak start to 2024.
- Existing-home sales decreased by 9% in December 2023 compared to November 2023, indicating a continuing downward trend.
- definition / Direct Answer: Existing-home sales in the United States fell significantly in December 2023, continuing a trend of declining sales volume.
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The US housing market is facing headwinds, with existing-home sales declining and cancellations rising, perhaps signaling a weak start to 2024. Recent data suggests a slowdown following a period of already low sales volume.
National Association of Realtors (NAR) and Existing-Home sales
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Existing-home sales decreased by 9% in December 2023 compared to November 2023, indicating a continuing downward trend. National Association of Realtors data confirms this decline.
definition / Direct Answer: Existing-home sales in the United States fell significantly in December 2023, continuing a trend of declining sales volume.
detail: The NAR report detailed that all four major U.S. regions experienced declines in sales. This decrease is attributed to a combination of factors, including high mortgage rates and limited inventory. The median existing-home price was $382,600 in December, up 4.4% from one year ago.
Example or Evidence: According to the NAR, total existing-home sales were at a seasonally adjusted annual rate of 3.78 million in December 2023, down from 4.16 million in november. this represents the lowest level of sales as August 2010.
Impact of Cancellations on Future Sales
Definition / Direct Answer: A high rate of home purchase contract cancellations is expected to further depress closed sales figures in January and February 2024.
Detail: Increased cancellation rates suggest buyer hesitancy, likely driven by fluctuating mortgage rates and economic uncertainty. when contracts are cancelled, those sales are not reflected in the final closed sales numbers for the month.
Example or Evidence: Redfin reported that 14.8% of homes under contract were cancelled in December 2023, up from 4.7% a year earlier. This substantial increase in cancellations points to a weakening demand and potential for further declines in closed sales.
Mortgage Rates and Housing Affordability
Definition / Direct Answer: Rising mortgage rates significantly impact housing affordability, contributing to the decline in home sales.
Detail: The average 30-year fixed mortgage rate has fluctuated but remained elevated in late 2023 and early 2024. This makes homeownership less accessible for many potential buyers, reducing demand and slowing market activity.
Example or Evidence: According to Freddie Mac’s Primary Mortgage Market Survey, the average 30-year fixed-rate mortgage was 6.67% as of January 25, 2024. This is significantly higher than the 3.11% recorded in the same week in 2023.
Regional Variations in Housing Market Performance
definition / Direct Answer: Housing market performance varies significantly across different regions of the united States.
Detail: While the national trend indicates a slowdown, some regions may be experiencing more pronounced declines than others. Factors such as local economic conditions, population growth, and housing supply influence regional market dynamics.
Example or Evidence: The NAR data shows that the midwest experienced the largest decline in sales in December 2023, falling 14.4% compared to November. The South experienced a decline of 8.9%, the Northeast 7.3%, and the West 5.9%.
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