2022 was slowest year for home sales in nearly a decade
U.S. home sales tumbled to the slowest pace in nearly a decade as soaring mortgage rates and sky high prices in 2022 pushed homeownership out of reach for many Americans.
The National Association of Realtors said Friday that existing U.S. home sales totaled 5.03 million last year, a 17.8% decline from 2021. That is the weakest year for home sales since 2014 and the biggest annual decline since 2008, during the housing crisis of the late 2000s.
The median national home price for all of last year jumped 10.2% to $386,300, the NAR said, and it’s up 42% from 2019, before ultra-low mortgage rates and pandemicfueled demand sent the market into a frenzy. That translates to a median $114,000 increase in housing wealth in three years.
“So, homeowners have done well during this housing (market) from 2019 through COVID until now,” said Lawrence Yun, the NAR’s chief economist. “The one big negative for home sales is home prices, which have risen dramatically, much faster than peoples’ income.”
Mortgage rates more than doubled in 2022, climbing to a two-decade high of 7.08% in the fall as the Federal Reserve continued to boost its key lending rate in a quest to cool the economy and tame inflation. Home sales slowed from a torrid pace at the start of the year as the surge in borrowing costs limited home hunters’ buying power.
As rates rise, they can add hundreds of dollars to monthly mortgage payments. That can discourage homeowners who locked in a far lower rate the last couple of years from buying a new home, and price out many would-be buyers. In 2022, first-time buyers accounted for only 26% of all home sales, the NAR said.
The average rate on a 30-year mortgage rate fell this week to 6.15%, its lowest level since September,
according to mortgage buyer Freddie Mac. Still, it remains nearly double the 3.56% average rate a year ago.
Mortgage rates are likely to remain a significant hurdle with the Federal Reserve consistently signaling its intent to keep raising short-term rates. While inflation has begun to slow, some Fed officials maintain that the central bank needs to keep hiking rates to make sure its job is done.
While mortgage rates don’t necessarily mirror the Fed’s rate increases, they tend to track the yield on the 10-year Treasury note. The yield is influenced by a variety of factors, including expectations for future inflation and global demand for U.S. Treasurys.
Existing home sales fell in December for the 11th month in a row to a seasonally adjusted annual rate of 4.02 million, the NAR said. That’s slightly better than what econo
plays; to Datto, a data backup and digital security provider; to broadband giant Frontier; to Xerox, which has its headquarters in Norwalk and its Connecticut Business Systems subsidiary based in Wethersfield.
Speaking in November, the CEO of ASML said that while the company expected “near-term uncertainties” it was pushing ahead with a major global expansion on confidence in the long-term outlook, in part due to the United States reinvesting in domestic chip production with the goal of technological “sovereignty” in ASML’s words to wean itself off a dependence on Taiwan for chips. ASML listed 160 openings in Wilton as of Friday, a number of them posted within the past few days.
Connecticut also has a number of consulting firms large and small that focus on information-technology strategy, systems installation and outsource management, to include Infosys in Hartford which has more than 300,000 employees globally.
Infosys has not reported any mass layoffs in the recent spate, though TimesNow in India where Infosys has its headquarters reported recently that hiring among the biggest outsourcing companies there has dropped to the lowest level in three years. In Connecticut, Infosys listed less than 30 openings statewide as of Friday spanning offices or client sites in Hartford, East Hartford, Stamford and Groton.
Between consultants and companies that employ IT staff in house, the Connecticut Department of Labor projects the state adding nearly 8,800 jobs in the information technology sector by 2030, pushing the total to more than 61,000 for a 17 percent increase from 2020.
During the 2001 internet bubble and the short recession that followed, unemployment in Connecticut peaked at 5.3 percent, well
below the unemployment rate after the Great Recession when financial markets collapsed as a result of runaway mortgage lending.
As of November, Connecticut unemployment stood at 4.2 percent, according to the Connecticut Department of Labor, with an update scheduled on Monday. Through the first week of January, DOL had not tracked any spike in initial claims for unemployment compensation in the broad industries it tracks that include elements of technology and information services.
Any number of Connecticut commuters work for tech companies in New York, whether in Manhattan offices or IBM in the lower Hudson River valley. Big Blue has a big Southbury campus with more than 1,000 workers at last report, some of them external contractors. IBM did not respond immediately Friday to provide an update on the Southbury workforce.
Hundreds of other Connecticut companies generate a majority of revenue through ecommerce, from travel giant Booking Holdings and its Priceline subsidiary based in Norwalk, to MetaRetail across town which operates its own online sales fulfillment center in Stratford.
Not since February 2021 has any Connecticut employer in the digital economy filed a mass layoff notice under the guidelines of the Workforce Adjustment and Retraining Act, when the IT-support systems company Pomeroy Technologies reported cutting more than two dozen Connecticut jobs after losing a contract.
A clearer picture could emerge in the coming few weeks during the wheelhouse of corporate earnings, to include Stamfordbased Charter Communications, Intel and Apple, the lone company in the Big Five that has not reported a mass layoff in recent weeks.