– Existing home sales in 2023 were at their lowest level in nearly 30 years
– The drop in sales was not due to high mortgage rates, but rather a lack of inventory
– The median sales price for existing homes reached a record high in 2023
– Despite the decline in sales, homeowners experienced gains in housing wealth
– Existing home sales in December 2023 saw a slight drop from the previous month
– However, there is optimism that sales will improve in the new year due to lower mortgage rates and expected increase in inventory
– Housing inventory at the end of December was down compared to the previous month, but up from a year ago
– Existing home sales decreased in most regions, with the Northeast experiencing the largest year over year price change.
Existing home sales dropped to their lowest level in nearly 30 years in 2023, according to a report from the National Association of Realtors (NAR), released Friday. In 2023, 4.09 million existing homes were sold, the fewest since 1995.
“Slow home sales in 2023 were accompanied by higher mortgage rates, with the average rate on a 30-year fixed rate mortgage hitting a 23-year high in early November. But we can’t blame high mortgage rates for the deficit in transactions last year. In reality, the demand for housing—and homeownership, in particular—has remained high, despite higher rates,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement. “Prospective homebuyers have been shut out of the market by a lack of inventory. If there had been more listings on the market in 2023, we would have had more home sales.”
A consequence of the tight inventory situation, the median sales price for an existing home rose to a record high of $389,800 in 2023. In December, the median sales price was $382,600, up 4.4% compared to a year ago.
“Despite sluggish home sales, 85 million homeowning households enjoyed further gains in housing wealth,” Lawrence Yun, NAR’s chief economist said in a statement. “Obviously, the recent, rapid three-year rise in home prices is unsustainable. If price increases continue at the current pace, the country could accelerate into haves and have-nots. Creating a path towards homeownership for today’s renters is essential. It requires economic and income growth and, most importantly, a steady buildup of home construction.”
Befitting a challenging year for the housing market, existing home sales closed out 2023 at a seasonally adjusted annual pace of 3.78 million units in December, down 1.0% drop from a month prior.
The monthly drop came after existing home sales rose 0.8% in November, breaking a five-month streak of declines.
On a yearly basis, existing home sales were down 6.2% in December.
Despite the grim numbers, Yun is optimistic.
“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” Yun said in a statement. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”
Heading into 2024, there were 1 million existing home units on the market, representing a 3.2 month-supply at the current sales pace. Compared to a month ago, housing inventory was down 11.5% at the end of December, but it was up 4.2% from a year prior.
“Continued strength in the homebuilding sector will be important to adding to supply in 2024,” Sturtevant said in a statement. “But listings of existing homes will continue to remain low as current homeowners, many holding sub-three percent mortgage rates, will be reluctant to move.”
Regionally, existing home sales fell in two of the four regions month over month, with the Midwest (900,000 units), and the South (1.72 million units), falling 4.3% and 2.8%, respectively. The sales pace in the Northeast held steady at 470,000 units, while the sales pace rose 7.8% on a monthly basis in the West to 690,000 units.
On a yearly basis, all four regions also recorded decreases in the existing home sales pace, with the Midwest falling 10.9%, the South dropping 4.4%, the Northeast falling 9.6% and the West dropping 1.4%.
The Northeast also recorded the largest year over year price change, rising 9.4% from a year prior to a median sale price of $428,100.
Property Chomp’s Take:
In recent news, existing home sales in 2023 reached their lowest level in nearly 30 years, according to a report from the National Association of Realtors (NAR). With only 4.09 million existing homes sold, it was the lowest number since 1995. This decline in sales can be attributed to various factors, including higher mortgage rates and a lack of inventory.
Lisa Sturtevant, the chief economist at Bright MLS, stated that the demand for housing and homeownership remained high despite the higher mortgage rates. The main issue was the lack of available listings on the market. If there had been more homes for sale, there would have been more transactions.
As a result of the tight inventory, the median sales price for existing homes rose to a record high of $389,800 in 2023. This increase in price further highlights the scarcity of available homes. Lawrence Yun, NAR’s chief economist, emphasized the need for a steady buildup of home construction to address this issue and create a path towards homeownership for renters.
In December, existing home sales closed out the year with a 1.0% drop from the previous month. This followed a 0.8% increase in November, breaking a five-month streak of declines. On a yearly basis, existing home sales were down 6.2% in December.
Despite these concerning numbers, Yun remains optimistic. He believes that the latest month’s sales represent the bottom and expects sales to turn higher in the new year. With mortgage rates lower and more inventory expected to appear on the market in the upcoming months, there is hope for a rebound in the housing market.
Heading into 2024, there were 1 million existing home units on the market, representing a 3.2-month supply at the current sales pace. While housing inventory was down 11.5% compared to the previous month, it was up 4.2% from a year ago. Sturtevant noted that continued strength in the homebuilding sector would be crucial in adding to the supply in 2024.
Regionally, existing home sales declined in two of the four regions. The Midwest and the South saw decreases of 4.3% and 2.8%, respectively. The Northeast remained steady, while the West experienced a 7.8% increase in sales. On a yearly basis, all four regions recorded decreases in existing home sales.
In conclusion, the