Sales of existing homes in the United States like this one in Chicago are down due to limited inventory and high mortgage rates
Sales of existing homes in the United States like this one in Chicago are down due to limited inventory and high mortgage rates AFP

Sales of existing homes in the United States have fallen for the 11th straight month, as a rough period of limited inventory and high mortgage rates persists, according to industry data released Friday.

The past year also saw the lowest annual sales rate since 2014, with a sizeable decline in unit sales not seen since the Great Recession period, said the National Association of Realtors (NAR).

The interest-sensitive property sector has been languishing as the Federal Reserve embarked on an aggressive campaign to rein in decades-high inflation.

As the Fed raised the benchmark lending rate seven times last year to cool the economy, borrowing costs went up -- pricing many buyers out of the key housing market.

"December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates," said NAR chief economist Lawrence Yun in a statement.

Sales of all types of homes and condos slipped 1.5 percent from November to December, hitting a seasonally adjusted annual rate of 4.0 million, the NAR said.

This was the weakest performance since November 2010, when the US was in a housing crisis, Yun told reporters.

While December's annual rate was better than expected, sales were still 34 percent down from December 2021.

But Yun expects numbers will pick up soon as mortgage rates have "markedly declined" after peaking in late 2022.

The 30-year fixed-rate mortgage, a popular option, averaged around 6.2 percent as of mid-January, according to home loan finance company Freddie Mac.

This was lower than in December, although still significantly higher than the rate a year ago.

Home prices, however, were "very solid," said Yun.

The median home price across housing types was $366,900, also above the year-ago period and the highest median price for December on record.

Three of four major regions in the country logged declines in sales, with sales in the West remaining unchanged, said the NAR.

Existing home sales make up 90 percent of the US real estate market.

"Sales now likely are very close to bottoming," said Ian Shepherdson and Kieran Clancy of Pantheon Macroeconomics in a report.

"The housing market has had to adjust, painfully, to a huge surge in mortgage rates," the report said.

Rubeela Farooqi of High Frequency Economics said in a note that although prices are moving in the right direction, they remain well above pre-pandemic levels.

"Overall, affordability issues are a key constraint for home sales," she added.