US Home Sales Plunged to Nearly 30-Year Low in 2023

Facts

• Existing US home sales sank in 2023 to their lowest since 1995 amid high mortgage rates, soaring prices, and tight inventory, the National Association of Realtors (NAR) reported on Friday. At 4.09 million, they declined 18.7% from 2022.¹
• While home sellers are 'holding firm on prices,' some economists are expecting this to ease as more inventory is added, with realty firm Zillow's data showing an uptick in new listings in January.²
• Despite mortgage rates having declined in the two months prior to December, home sales declined 1% from November to a seasonally adjusted annual rate of 3.78M — the slowest pace since 2010.³
• The average rate on the 30-year fixed mortgage loan increased to around 8% in October. In November, it fell to around 7% and is now hovering at 6.89%, Mortgage News Daily reported.⁴
• Meanwhile, according to realty major Redfin, pending home sales rose 4.1% monthly in December and were up 5.9% annually — the highest rises since September 2021 and June 2021, respectively.⁵
• While first-time buyers accounted for 29% of all home sales in December — down from 31% in November — the properties put up on sale reportedly stayed on the market for 29 days, up from 25 the previous month.⁶

Sources: ¹Associated Press, ²Yahoo Finance, ³Investopedia, ⁴CNBC, ⁵Mansion Global and ⁶ForexLive.

Narratives

• Narrative A, as provided by Associated Press. With average mortgage rates considerably higher than they were two years ago and a chronic lack of inventory, the housing industry in the US shows little sign of improving. It's even worse for first-time home buyers, who historically account for up to 40% of the sales, as they have no home equity to finance their investment. This situation looks dire.
• Narrative B, as provided by Yahoo Finance. While the demand-supply imbalance will carry into 2024, things are set to ease up ahead in the US real estate market. Mortgage rates were already slipping by December, when they hit a six-month low of 6.61%. Meanwhile, new listings are witnessing a revival, too, which could help buyers over time.

Predictions