Real Estate News: How Much Did Home Sales Rise In December? Affordability Still A Major Issue

U.S. existing-home sales increased by 3.6% in December, to a seasonally adjusted annual rate of 5.54 million. High mortgage rates, which are influenced by the Federal Reserve, hurt sales in the first half of 2019, but lower rates spurred purchases in the second half of the year.

Sales increased in the Northeast, South and West, but declined in the Midwest.

President Trump has pressured the Federal Reserve to lower interest rates, which has made it more enticing for individuals to buy mortgages. According to Freddie Mac as of Jan. 16, the average rate on a 30-year fixed mortgage was 3.65%, in comparison to 4.45% a year ago.

At the same time, a lack of affordable homes continues to be a major problem. The National Association of Realtors (NAR) has said that home prices have increased on an annual basis for the past 94 consecutive months. Housing inventories have fallen at all price points under $1 million in the past year.

“Areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth," NAR Chief Economist Lawrence Yun said. “The hope is for price appreciation to slow in line with wage growth, which is about 3%.”

The strong home sales could reflect the general strength of the economy, with unemployment at 3.5% in December.