The real estate market took a downward turn in 2022, as rising interest rates rapidly slowed the frenzied sales activity seen the year before — but home prices still hit a record high.

The median home sale price in 2022 was $386,300, up 10.2% from 2021 and the highest on record, according to data from the National Association of Realtors released Friday.

Meanwhile home sales had their weakest year since 2014, with 5.03 million homes sold, down 17.8% from the year before. It was the biggest annual drop in sales since 2008, when the market was in the midst of the housing crisis.

Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — declined for the 11th month in a row in December, even as surging mortgage rates that were over 7% in November came down slightly. Buyers were kept out of the market by stubbornly high prices and rates still double what they were the year before.

In December, sales dropped 1.5% from November and were down 34% from a year ago. All regions of the country saw year-over-year declines in sales, and three regions saw month-to-month drops, with the West unchanged.

But prices kept rising in December, with a median price of $366,900, up 2.3% from a year ago, which is the smallest price gain since the lockdown period in May 2020. The price increase marks more than a decade of year-over-year monthly gains.

“December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” said Lawrence Yun, NAR’s chief economist. “However, expect sales to pick up again soon, since mortgage rates have markedly declined after peaking late last year.”

‘A transition year’ for real estate

After 2021’s real-estate boom fueled by some of the lowest mortgage rates on record, 2022’s rise in rates in clamped down demand and slowed home price growth. Now, the housing market is transitioning to something closer to typical in the year ahead, experts say.

“After the boom of sales in 2021, 2022 was a transition year in which sales declined sizeably,” said Yun. “We know there are concerns about the housing market tumbling down and sales have come down, but the prices are up for the year.”

While the 10% gain in median home prices over the year was less than the 17% annual gain in 2021, month-by-month price appreciation got smaller throughout 2022 with a 15.4% annual price increase in January dwindling to December’s 2.3% price growth from the prior year.