Rising rates leave dent in US housing market

Existing home sales fell in December

Single family homes in the U.S. (Credit: Rachel Elaine via Flickr)
Single family homes in the U.S. (Credit: Rachel Elaine via Flickr)

The number of U.S. existing home sales fell in December, as rising mortgage rates threaten to cool off a hot property market.

Sales volume fell 2.8 percent compared to November on a seasonally-adjusted basis to an annualized 5.49 million deals, according to the National Association of Realtors, after having grown through much of 2016.

“Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” NAR chief economist Lawrence Yun told the Wall Street Journal. “However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.”

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Mortgage rates rose from 3.5 percent at the beginning of November to 4.3 percent at the end of December, according to Freddie Mac, while the median home price rose 4 percent to $232,200.

The 5.45 million existing home sales recorded in 2016 are slightly above the 2015 total of 5.25 million, but still well below the 2006 peak of 6.48 million.

Zillow chief economist Svenja Guddell argued that rising mortgage rates will have “some of the bigger impacts in very expensive metros.” [WSJ]Konrad Putzier