Existing Home Sales Up for 3rd Straight Month in December

Existing home sales rose for the third month in a row to close out 2024. According to the data from the National Association of Realtors (NAR), existing home sales were up 2.2% from November, reaching a seasonally adjusted annual rate of 4.24 million units in December. This figure came in just above the expected 4.19 million. Existing home sales are up 9.3% compared to one year ago.

"Home sales in the final months of the year showed solid recovery despite elevated mortgage rates," said NAR Chief Economist Lawrence Yun. "Home sales during the winter are typically softer than the spring and summer, but momentum is rising with sales climbing year-over-year for three straight months. Consumers clearly understand the long-term benefits of homeownership. Job and wage gains, along with increased inventory, are positively impacting the market."

Background on Existing Home Sales

Existing home sales measures the monthly sales of previously owned single-family homes. It makes up a huge part of the residential real estate market, as 90% of purchased homes are previously-owned according to the National Association of Realtors. More importantly, there exists a strong correlation between purchases of existing homes and consumer spending. An increase in existing home sales can indirectly stimulate economic activity with increased consumer spending on new furnishings and appliances. Alternatively, a sustained drop in existing home sales often foreshadows a downturn in the economy.

Here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available for the last twelve months.

Existing Home Sales

Over this time frame, we clearly see the real estate bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession with monthly sales as low as 3.45 million units to as high as 5.44 million units. We have seen that same volatility following the most recent recession, with sales ranging between 3.83 million units to 6.73 million units.