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Home sales in the US sank to the lowest in nearly 30 years, as a sharp rise in interest rates increased costs for buyers and persuaded many potential sellers with lower rates to stay put. |
Just 4.09 million homes were purchased, the fewest since 1995, as tight supply pushed prices to a new record, the National Association of Realtors said. |
The organisation said it expected the market to improve in 2024. But it warned that affordability would remain an issue. |
The median sale price in 2023 climbed 1% over the year, to $389,800, according to the NAR. |
The median price has jumped more than 40% since 2019, after a surge in prices during the pandemic. |
Lawrence Yun, economist at the NAR, said the recent price rises were "unsustainable" and that boosting supply to create a path towards homeownership for renters was "essential". |
The housing market in the US has slowed abruptly since 2022, when the Federal Reserve started raising interest rates in a bid to curb inflation. |
Last year, US mortgage rates, which are typically fixed for a 30-year period, shot above 7% for the first time in decades. The moves ended a buying frenzy that had erupted during the pandemic. |
It has also created a stark divide between would-be buyers and existing homeowners, many of whom have loans with rates below 4% and would face sharply higher costs to move. |
Mr Yun said he thought that December would mark the bottom of the market, noting that mortgage rates have dropped back in recent months, falling to 6.6% this week, the lowest level since May. |
The declines come as investors bet the central bank will start reversing course and cut rates later this year. |
But Nancy Vanden Houten, lead US economist for Oxford Economics, said while that may help demand, rates are likely to remain above 6% - not enough to bring a substantial number of sellers into the market. |
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