H
ome sales are experiencing a significant turnaround, with the largest year-over-year increase in over three years. Existing-home sales rose 9.3% annually in December and 2.2% month-over-month, according to the National Association of REALTORS. This uptick is a welcome respite from the lowest level for existing-home sales in nearly 30 years.

    NAR Chief Economist Lawrence Yun attributes the increase to recent job and wage gains, as well as a rising number of homes for sale. Home prices continue to rise, with the median existing-home sales price increasing 6% in December compared to last year, reaching a record high of $407,500. However, this growth is largely driven by the upper-end market, which saw sales increase by 35% from a year ago.

    First-time home buyers are still struggling, as they often can't leverage equity from their current homes for a purchase. Despite a slight increase in December, first-time buyers comprised only 31% of sales, down from 29% in the same month last year. On the other hand, existing homeowners and investors are using more cash in real estate transactions, with all-cash sales growing to 28% of total sales.

    The inventory of unsold existing home listings is up 16% compared to a year ago, offering more choices for home shoppers but also increasing competition for sellers. Builders are ramping up construction of new single-family homes, adding to the supply. Buyer demand remains high, with properties typically selling in about a month.

    Mortgage rates remain a wild card, having eased slightly this week after rising above 7% last week. Yun predicts that mortgage rates may move lower in the coming months, potentially reaching 6.5% by spring. Existing-home sales rose in three of the four major regions of the US last month, led by the Northeast. The Midwest was the only region to post a slight decrease.