US Existing Home Sales Plummet to 30-Year Low as Median Price Surges

The US housing market has witnessed a significant downturn in 2024, with existing home sales tumbling to their lowest level in nearly three decades. According to the National Association of Realtors (NAR), existing home sales fell to a seasonally adjusted annual rate of 3.84 million in September 2024, the lowest level since October 2010. This decline can be attributed to a combination of factors, including rising mortgage rates, limited housing inventory, and economic uncertainty.



Mortgage rates have played a crucial role in the decrease in existing home sales. The 30-year fixed-rate mortgage rate reached 6.18% in November 2024, up from 5.16% in January 2024. This increase has made home purchases more expensive, leading to a decline in demand. Additionally, the "lock-in" effect has discouraged many homeowners from moving, as prepaying their current mortgage and taking out a new mortgage at a significantly higher rate would be financially disadvantageous.

The total housing inventory has also contributed to the decline in existing home sales. In November 2024, the inventory was 1.33 million units, down 2.9% from October 2024. This low inventory level has limited the number of homes available for sale, further reducing sales. The median existing-home sales price has also surged, rising by 4% to $407,200 in October 2024 and a further 4.7% to $406,100 in November 2024. This rapid increase in median home prices has significantly impacted affordability for potential buyers, making it increasingly difficult for first-time homebuyers and low- to middle-income households to enter the market.

Economic uncertainty has also played a role in the decline in existing home sales. Factors such as the COVID-19 pandemic, potential impacts from a second Trump administration, and the rising costs of damages related to climate change have likely contributed to the cautious approach of potential buyers. This uncertainty can make potential buyers more hesitant about making large financial commitments like purchasing a home.

To address the affordability challenges in the housing market, homeowners and policymakers can employ several strategies. These include encouraging renovation and home improvement, promoting adjustable-rate mortgages (ARMs) and other variable-rate products, expanding the rental housing market, addressing the three Ds (death, divorce, and debt), and encouraging job growth and economic stability.

In conclusion, the US existing home sales market has experienced a significant downturn in 2024, with sales plummeting to their lowest level in nearly 30 years. Rising mortgage rates, limited housing inventory, and economic uncertainty have all contributed to this decline. To address these challenges, homeowners and policymakers must work together to implement effective strategies that improve affordability and stabilize the housing market.