US Existing Home Sales Suffer Biggest December Drop Since 2009

Amid Omicron anxiety, surging mortgage rates, and a dip in homebuilder sentiment, analysts expected a modest 0.6% MoM drop in existing home sales in December, but while they were right on direction, the magnitude was way off as December Existing Home Sales crashed 4.6% MoM – the biggest MoM drop since Feb 2021.

Source: Bloomberg

This is the worst December drop in sales since 2009.

“Even as sales are falling, the fact that prices are showing this strength is showing that buyers are there. But the lack of inventory is hindering some of the sales activity,” Lawrence Yun, NAR’s chief economist, said on a call with reporters.

While the December print saw total existing home sales slide, 2021 still saw the best annual sales since 2006…

Source: Bloomberg

One potential problem looming is that home prices appreciated by the most since 1999. The median selling price rose 15.8% in December from a year ago to $358,000. That compares with $354,400 in the prior month.

Lean inventories remain the housing market’s biggest problem.

There were just 910,000 homes for sale last month, down 18% from a month earlier and 14.2% from a year ago.

At the current pace it would take 1.8 months to sell all the homes on the market, also a record low. Realtors see anything below five months of supply as a sign of a tight market.

All regions posted sales decreases last month, led by the West and South