In December, existing home sales reversed course, suddenly dropping after months of continuous growth, according to the latest Existing Home Sales report from the National Association of Realtors.
And while many factors contributed to the decline, Zillow attributes the drop to climbing mortgage rates, stock market volatility and political pandemonium.
According to NAR’s report, total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 6.4% from November to a seasonally adjusted rate of 4.99 million sales in December. This is down a full 10.3% from December 2017’s 5.56 million sales.
“On top of mortgage rate headwinds, the stock market took a wild ride late last year, and the uncertainty associated with the partial federal government shutdown – not to mention closings delayed from shuttered federal agencies such as the Department of Agriculture’s rural lending arm – contributed to the slow numbers,” Zillow writes. “While December sales were weak, the drop appears exaggerated compared to December 2017, which saw a surge in closings in anticipation of tax reforms that limited some historic tax benefits of homeownership.”
In fact, NAR reports slowdowns in housing inventory as December's rate fell to 1.55 million existing homes for sale, down from 1.74 million in November. Notably, this is still an increase from 1.46 million in December 2017.
That being said, NAR notes the median existing home price for all housing types increased in December by 2.9% to $253,600, up from $246,500 in December 2017. This marks the 82nd straight month of year-over-year gains, according to NAR.
Zillow states that while sales may have ended 2018 on a soft note, market headwinds have faded somewhat in early 2019.
“Mortgage rates are back down, inventory is on the rise, and more listings are carrying price cuts after a slow autumn,” Zillow writes.