U.S. existing home sales hit the strongest level since 2023, significantly exceeding expectations, with the weakest price increase in two and a half years

U.S. existing home sales rose to their highest level since 2023 in December, bringing a positive signal to the U.S. real estate market, which has lacked momentum for years.

Data released by the National Association of Realtors (NAR) on Wednesday showed that the annualized total of existing home sales in the country for December was 4.35 million units, the highest level since February 2023, with expectations of 4.22 million units and a previous value of 4.13 million units; existing home sales in December increased by 5.1% month-on-month, compared to an expected increase of 2.2% and a previous increase of 0.5%. This data exceeded the expectations of all economists surveyed by the media.

The continued decline in borrowing costs and the slowdown in home price increases have driven home buying activity across the U.S.

The median price of existing homes in December rose only 0.4% year-on-year to $405,400, marking the weakest increase in two and a half years.

NAR Chief Economist Lawrence Yun stated in a statement:

In the fourth quarter, as mortgage rates declined and home price increases slowed, market conditions began to improve.

However, NAR data shows that December inventory increased only 3.5% year-on-year to 1.18 million units. Yun expressed that he would prefer to see a year-on-year increase of 30%–40%. The inventory growth is not strong enough, which makes me somewhat concerned.

Analysis indicates that the demand pace in December suggests a gradual recovery in the U.S. secondary housing market by 2026. Over the past three years, annual sales in this market have hovered around the low level of 4 million units; on an annual basis, the cumulative sales for the three years ending in 2025 represent the weakest level since 1995.

Last week, U.S. mortgage rates fell to about 6.2%, the lowest level in over a year. As of November, NAR's Housing Affordability Index (which measures the ability of a typical household to qualify for a mortgage) also rose to its highest point in nearly three years.

Industry insiders believe that as income growth outpaces home prices and an increase in housing supply provides buyers with more options, the housing affordability crisis in the U.S. is easing to some extent. However, the most realistic expectation is for a sustained, gradual improvement rather than a rapid rebound.

For most of 2025, the number of homes for sale is expected to continue increasing, reaching a five-year high in July, particularly suppressing home prices in the U.S. "Sun Belt" regions. The rise in listings has driven a sales rebound in the second half of the year.

At the current sales pace, market inventory is equivalent to 3.3 months of supply.

The Trump administration recently announced a series of plans aimed at improving housing affordability to address voters' concerns about rising housing costs. Last week, Trump proposed banning institutional investors from purchasing single-family rental homes and requested that Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds to help lower borrowing rates.

Regionally, sales in the South, the largest housing transaction market in the U.S., rose to their highest level since February 2023; existing home sales in other regions also reached their highest levels in at least 10 months