The housing market just delivered a number that would have seemed impossible two years ago.
Existing home sales climbed to a seasonally adjusted annual rate of 4.15 million in December, according to the National Association of Realtors, the strongest pace since 2021.
It's a small headline with a big backstory.
For most of 2023 and 2024, buyers were locked out by a brutal combination: mortgage rates near 8%, sellers clinging to 3% loans, and prices that refused to budge.
Inventory has been climbing as more homeowners decide they can't wait forever to move, and mortgage rates have settled into the mid-6% range.
That's still not cheap, but it's a far cry from the panic-inducing peaks.
Roughly a third of December sales went to people purchasing their first home, up from the low 20s earlier in the cycle.
That matters because first-timers drive the whole chain — they free up rentals, and their purchases let existing owners trade up.
Sellers are feeling the difference too, though not always happily.
The typical home sold for around $400,000, and price growth has flattened in many markets.
Homes in Austin, Phoenix, and Denver that drew bidding wars in 2022 now sit for weeks with price cuts. "Buyers have more negotiating power than they've had in years," said one NAR economist. "That doesn't mean deals are falling from the sky, but the days of waiving inspections and paying $50,000 over asking are largely over." What does this mean for your wallet?
If you've been sitting on the sidelines waiting for rates to fall below 6%, you may be waiting a while.
Forecasters expect rates to bounce between 6% and 7% through 2026, with small dips tied to Fed moves and inflation data.
On a $400,000 home with 20% down, a 6.5% mortgage runs about $2,022 a month for principal and interest.
At 7.5%, that jumps to roughly $2,237 — a difference of about $2,600 a year.
That gap is why even a quarter-point move changes what you can afford.
A few things worth doing right now if you're shopping.
Get a pre-approval before you tour homes, compare at least three lenders, and ask about buy-downs — sellers in slower markets are increasingly willing to pay points to close a deal.
Also check whether you qualify for first-time buyer programs, since many states have quietly expanded income limits.
If you already own a home and want to refinance, the math is tighter.
Refinancing usually only makes sense if you can shave at least 0.75 to 1 percentage point off your rate and plan to stay put long enough to recoup closing costs, which typically run 2% to 5% of the loan.
The bottom line is that the market is thawing, not booming.
Buyers who spent two years losing every bidding war finally have room to breathe, but affordability is still strained, and anyone expecting a dramatic crash is likely to be disappointed.
Our take: the smartest move right now isn't waiting for the perfect rate — it's getting your financing in order so you can move quickly when the right house shows up.
Final Thoughts
In a market that's finally balanced, preparation beats prediction.