Existing home sales in the world’s largest economy slumped to an eleventh consecutive month of declines in December.
Last month’s US existing home sales dropped by 1.5% to a seasonally adjusted annual rate of 4.02 million units. December’s figure was not only the eleventh successive month of decline, the longest losing streak since 1999, but also marked the lowest level since November 2010.
The latest economic news from the US is worse than analysts had forecast. Market expectations were for a decline of 3.96 million units.
Many home sellers in the US are now resorting to offering large discounts in order to sell their homes as the housing market continues to cool at a rapid pace.
Home resales, which constitute a large portion of housing sales in the US, plunged 34.0% on a year-on-year basis last month. Home resales slumped 17.8% to 5.03 million units in 2022. This was the lowest annual total since 2014 and the largest annual decline since 2008.
Interest Rates the Key
Mortgage rates in the US more than doubled last year. They hit a two-decade high of 7.08% in the third quarter of 2022 as the Federal Reserve continued to support its key lending rate to control the economy and stay on top of rising inflation.
Conrad DeQuadros, senior economic advisor at Brean Capital in New York, commenting on the US existing home sales data, pointed towards possible declines in interest rates providing a boost to the US housing market. He said:
“Existing home sales are somewhat lagging. The decline in mortgage rates could help undergird housing activity in the months ahead.”
Conrad DeQuadros, senior economic advisor at Brean Capital in New York
