2023 Marks Worst Year for U.S. Home Sales in 3 Decades, Reports NAR

U.S. Existing-Home Sales Decline Again in December 2023

The National Association of Realtors reported a retreat in U.S. existing-home sales for December 2023.

Among the four major U.S. regions, sales decreased in the Midwest and South, while the West saw a rise, and the Northeast remained unchanged. All regions witnessed year-over-year declines in sales.

In terms of annual figures, existing-home sales plummeted to the lowest level since 1995, standing at 4.09 million, while the median price hit a record high of $389,800 in 2023.

Total existing-home sales, encompassing completed transactions including single-family homes, townhomes, condominiums, and co-ops, dropped by 1.0% from November to a seasonally adjusted annual rate of 3.78 million in December.

Year-over-year, sales saw a 6.2% decline, down from 4.03 million in December 2022.

Lawrence Yun, Chief Economist at NAR, commented, “The latest month’s sales look to be the bottom before inevitably turning higher in the new year.

Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”

Total housing inventory by the end of December stood at 1 million units, marking an 11.5% decrease from November but a 4.2% increase from one year ago (960,000).

Unsold inventory represented a 3.2-month supply at the current sales pace, down from 3.5 months in November but up from 2.9 months in December 2022.

The median existing-home price for all housing types in December reached $382,600, showing a 4.4% increase from December 2022 ($366,500). Price hikes were observed across all four U.S. regions.

Yun added, “Despite sluggish home sales, 85 million homeowning households enjoyed further gains in housing wealth. 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.”

Realtor Sentiment Report: December 2023 Highlights

The Realtors Confidence Index, a monthly gauge of real estate market activity, revealed that properties lingered on the market for an average of 29 days in December.

This duration showed a slight increase from 25 days in November and 26 days in December 2022. Notably, 56% of homes sold in December were off the market in less than a month.

In terms of buyer demographics, first-time buyers comprised 29% of sales in December.

This figure dipped from 31% in November 2023 and mirrored the same percentage as in December 2022. NAR’s 2023 Profile of Home Buyers and Sellers, released in November 2023, reported an annual first-time buyer share of 32%.

Cash transactions accounted for 29% of sales in December, showing a slight uptick from 27% in November 2023 and 28% in December 2022.

Among these cash transactions, individual investors or second-home buyers, who often engage in cash sales, acquired 16% of homes in December. This percentage declined from 18% in November and remained consistent with the previous year’s figures.

Distressed sales, including foreclosures and short sales, maintained a steady presence, representing 2% of total sales in December.

This figure remained virtually unchanged from the previous month and the same period in the previous year.

Mortgage Rate Trends

As per Freddie Mac’s latest report, the 30-year fixed-rate mortgage averaged 6.60% as of January 18. This marks a slight decrease from the previous week’s average of 6.66%. However, compared to the same time last year, the rate has seen a notable increase from 6.15%.

Single-Family and Condo/Co-op Market Activity

In December, the sales of single-family homes saw a slight dip, reaching a seasonally adjusted annual rate of 3.4 million. This represents a 0.3% decrease from November’s figure of 3.41 million and a 6.1% decline compared to the previous year.

Despite the decrease in sales volume, the median price of existing single-family homes rose to $387,000 in December, reflecting a 4.0% increase from December 2022.

Meanwhile, existing condominium and co-op sales experienced a more pronounced decline in December, with a seasonally adjusted annual rate of 380,000 units.

This marks a notable 7.3% decrease from both November and the same period last year, which recorded sales of 410,000 units.

Despite the decline in sales volume, the median price of existing condos rose to $343,800 in December, indicating an 8.2% increase from the previous year’s median price of $317,700.

Regional Analysis of Existing-Home Sales

Northeast Region:
Existing-home sales in the Northeast remained stable at 470,000 units in December compared to November figures but saw a notable decline of 9.6% from December 2022.

Despite the dip in sales volume, the median price in the Northeast surged to $428,100, marking a significant 9.4% increase from the previous year.

Midwest Region:
In the Midwest, existing-home sales experienced a decline of 4.3% from November to an annual rate of 900,000 units in December.

Compared to the previous year, sales in the region were down by 10.9%. Despite the decrease in sales, the median price in the Midwest saw a rise to $275,600, reflecting a 5.9% increase from December 2022.

South Region:
Existing-home sales in the South region decreased by 2.8% from November to an annual rate of 1.72 million units in December, representing a 4.4% decline from the previous year.

However, despite the decrease in sales volume, the median price in the South climbed to $352,100, indicating a 3.8% increase from one year ago.

West Region:
The West region saw a notable increase in existing-home sales, growing by 7.8% from the previous month to reach an annual rate of 690,000 units in December.

However, compared to the same period last year, sales in the region were down by 1.4%. Despite the slight decline in year-over-year sales, the median price in the West surged to $582,000, marking a 4.8% increase from December 2022.