The U.S. housing market has long been a central pillar of the American economy, reflecting household wealth, credit conditions, and demographic trends. Systematic tracking of existing home sales began in the 1960s, when the National Association of Realtors (NAR) started compiling transaction data to better measure housing demand and market liquidity. Unlike new home sales, existing home sales capture activity in the resale market, which accounts for the vast majority of housing transactions. Over time, this data has become a key indicator for economists, policymakers, and investors assessing the health of the housing sector. Historically, existing home sales have been highly sensitive to interest rates, employment conditions, and credit availability.
The most recent existing home sales report showed a notable month-over-month increase, reflecting a short-term improvement in buyer activity. This pickup was largely driven by easing mortgage rates toward the end of the year and some moderation in home-price growth, which improved affordability at the margin. However, despite the monthly gain, overall sales levels remain historically low compared with pre-pandemic norms. Annual sales volumes still rank among the weakest in decades, underscoring that the market has not returned to a normalized pace. The report highlights momentum, but not a full recovery.
Looking at the broader trend, existing home sales have been in a prolonged downturn since peaking in 2021. Rapid interest rate hikes significantly reduced affordability, sidelining many potential buyers and sharply slowing transaction volumes. While periodic rebounds have occurred, they have generally been short-lived and tied to temporary rate declines. The longer-term trend remains subdued, with sales oscillating near cycle lows rather than meaningfully rebounding. This pattern suggests structural headwinds rather than purely cyclical weakness.
Supply and demand constraints continue to weigh heavily on the existing home sales market. On the supply side, many homeowners remain locked into low mortgage rates from prior years, discouraging them from selling and limiting inventory. On the demand side, high borrowing costs and elevated home prices have constrained affordability, particularly for first-time buyers. The imbalance between limited supply and cautious demand has kept prices relatively firm despite weak sales volumes. These frictions have reduced market turnover and slowed the normal functioning of the housing market.
In conclusion, existing home sales provide valuable insight into the intersection of interest rates, household finances, and housing supply dynamics. While recent data shows pockets of improvement, the broader market remains constrained by affordability challenges and limited inventory. A sustained recovery will likely require a combination of lower mortgage rates, increased housing supply, and stronger income growth. Until those conditions align, existing home sales are likely to remain volatile and below historical averages. The housing market’s path forward will depend less on isolated monthly gains and more on structural shifts in financing and supply.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals based on their specific circumstances.