Existing home sales are down 1.0 percent in December to an annual rate of 3.78 million units after an unrevised 3.82 million units in November. The decrease is more than anticipated by the consensus of 3.82 million units in the Econoday survey of forecasters. December sales are down 6.2 percent year-over-year.

Home resales continue to be held back by lack of inventory and the higher mortgage rates of October and November when December's sales contracts were signed. The Freddie Mac average rate for a 30-year fixed rate mortgage hit a near-term peak of 7.65 percent in October and 7.44 percent in November. Rates began to decline in December when the average was 6.82 percent, and is even lower at 6.63 percent for January to-date. Between the normal increase in inventory in the spring months and mortgage rates below 7 percent, sales should pick up in 2024.

NAR Chief Economist Lawrence Yun said,"The latest month's sales look to be the bottom before inevitably turning higher in the new year." He continued,"Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months."

For 2023, the annual sales pace is 4.09 million units compared to 5.03 million units in 2022 and 6.12 million units in 2021. The 2023 rate is the lowest in 30 years and reflects restrained home affordability at a time of elevated prices and relatively higher mortgage rates compared to the prior two years. Yun said that this is a"tough environment" for home sales.

Resales of single-family homes are down 0.3 percent in December to 3.40 million units month-over-month and down 6.1 percent year-over-year. Resales of multi-unit homes are down 7.3 percent month-over-month and also down 7.3 percent year-over-year.

The median price of a home resale is down 1.3 percent to $382,600 in December after $387,700 in November, but up 4.4 percent year-over-year. Selling prices tend to rise in the first half of the year and then decline in the second half. However, narrow stocks of existing homes for sale mean that prices declined less than usual. The months' supply of homes available for sale is down to 3.2 in December from 3.5 in November, but slightly higher than 2.9 months in December 2022.

Sales are expected to hold at November's as-expected 3.82 million annual rate. Low inventory of homes for sales along with high prices and high interest rates have been constraining sales.

Existing home sales tally the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer.

Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.