
(DCWatchdog.com) – In a striking occurrence, in 2024, U.S. home sales plunged to their lowest level since 1995, starkly illustrating the impact of high mortgage rates and challenging market conditions.
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This historic dip reveals the intense pressure on potential homebuyers as affordability wanes and prices soar despite enduring demand.
Home sales in the United States plummeted to 4.06 million in 2024, marking the weakest performance in nearly three decades.
The real estate landscape has been dramatically altered by soaring mortgage rates, which began their upward trajectory from pandemic-era lows back in 2022.
As mortgage rates hovered around an alarming 7% after reaching a 23-year high of nearly 8% in October 2023, many potential buyers found themselves priced out of the market.
The median national home price in 2024 climbed 4.7% to a record $407,500, further exacerbating the affordability crisis.
High borrowing costs coupled with these rising home prices have significantly reduced the buying power of the average American family.
Despite a strong demand for homes, the limited supply has continued to prop up prices, making it difficult for first-time buyers to enter the market, Reuters notes in a report.
The U.S. population has surged by over 70 million people since 1995, intensifying the strain on an already limited housing inventory.
By December, the U.S. had just 1.15 million homes on the market, far below the historical average of 2.25 million.
This inventory represents only a 3.3-month supply, well under the balanced market range of four to six months.
Despite these challenges, December saw a glimmer of hope with home sales rising 2.2% from the previous month.
This marks the third consecutive monthly increase, with a rebound of 9.3% compared to December of the previous year.
Nonetheless, the annual share of first-time buyers in 2024 was a mere 24%, significantly beneath the historical average of 40%.
Sales gains were primarily driven by transactions of high-value homes, with sales for properties valued over $500,000 representing the largest increase since June 2021.
However, this masks a growing divide as sales of homes priced under $250,000 have declined, reflecting the hard reality for those in the lower-income bracket.
Adding to this complexity are sales for homes priced above $1 million, which rose by 35% from the previous year, Fox Business reports.
The unprecedented dip in home sales paints a complex picture of the U.S. housing market.
While some segments saw growth, the affordability crisis and limited supply continue to cast a shadow over 2024’s market reality.
As we look forward, the focus must remain on addressing these persistent issues to restore stability and accessibility in the sector.
Analysts are now carefully watching interest rate policies, as any future shifts could either exacerbate or alleviate the struggles faced by potential homeowners.
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