WASHINGTON D.C.: In December 2022, US existing home sales declined to a 12-year low, but lower mortgage rates raised cautious optimism about the steady recovery of housing market.
Now, a report from the National Association of Realtors also showed that as sellers in some parts of the country resorted to offering discounts, median house prices were rising at the slowest pace since early in the COVID-19 pandemic.
Experts noted that the housing sector was driven into a recession by the Federal Reserve Bank's largest interest rate hikes since the 1980s.
"Existing home sales are somewhat lagging. The decline in mortgage rates could help undergird housing activity in the months ahead," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York, as quoted by Reuters.
Last month, existing home sales fell 1.5 percent to a seasonally adjusted annual rate of 4.02 million units, the lowest level since November 2010 and the 11th consecutive monthly decline in sales, which is the longest stretch since 1999.
However, the worst of the housing market decline could be over.
According to data from mortgage finance agency Freddie Mac, this week the 30-year fixed mortgage rate dropped to an average of 6.15 percent, the lowest level since mid-September.
While the rate is still well above the 3.56 percent average during the same period last year, it was down from 6.33 percent from the previous week and has declined from an average of 7.08 percent early in the fourth quarter, the highest since 2002.
In 2022, house prices rose by 10.2 percent due to a shortage of homes for sale, while housing inventory totaled 970,000 units. There was also an increase from the 880,000 units in 2021, with supply being at the second lowest level on record.
"Home price growth is likely to continue to decelerate and we look for it to turn negative in 2023. The limited supply of homes for sale will prevent a steep decline," noted Nancy Vanden Houten, US economist at Oxford Economics in New York, as reported by Reuters.