Existing home sales haven't been this low since 1995
According to the latest NAR data, just 4.09 million existing home sales were reported in 2023, the lowest number in nearly three decades.
Key points:
- Home sales fell 1% in December, closing out a year marked by sluggish sales activity.
- Compared to a year prior, existing home sales were down 6.2% while median prices were up 4.4%.
- The median price for all existing home types in December was $382,600.
Existing home sales fell 1% in December, capping off a year where home sales dipped to lows not seen in years.
According to the latest NAR data, December posted a seasonally adjusted annual rate of 3.78 million home sales. For the year, just 4.09 million existing home sales were reported in 2023 — the lowest number since 1995.
There were only three months in 2023 where existing home sales increased over the previous month: February, May, and November. Every other month saw existing home sales slide. The biggest monthly drop was in October, when home sales fell 4.1%.
On an annual basis, existing home sales were down 6.2% in December — but that was actually the smallest year-over-year decline. Throughout most of 2023, declines were in the double-digits.
Slow sales didn't push prices down in 2023
The flip side is that home prices remain strong. The median price for all existing home types in December was $382,600. This represents a 4.4% increase from $366,500 a year ago but a decline from November's $387,600 median price.
"Despite sluggish home sales, 85 million home-owning households enjoyed further gains in housing wealth," NAR Chief Economist Lawrence Yun said of the latest data. "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."
Other experts shared similar concerns regarding affordability.
"The bad news is that home affordability is not likely to improve for potential homebuyers, so those looking to buy a home should make an offer before the spring home buying season starts," CoreLogic's chief economist Dr. Selma Hepp said.
Low inventory, not high mortgage rates, the biggest culprit
Although mortgage rates hit multi-decade highs in 2023, Bright MLS Chief Economist Dr. Lisa Sturtevant said that was just one part of the equation. "We can't blame high mortgage rates for the deficit in transactions last year," she said, as "the demand for housing — and homeownership, in particular — has remained high, despite higher rates" due to the millennial cohort reaching their "prime first-time homebuying age range."
The bigger problem is housing supply, said Sturtevant: "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."
According to NAR's report, there were 3.2 months worth of inventory in December — up slightly from 2.9 months a year ago, but well below the six-month level considered to be an indicator of a balanced market.
Monthly sales rose in the West
When looking at how home sales stacked up across the different regions, sales fell in the Midwest and South while they rose in the West and remained unchanged in the Northeast. All four regions tallied year-over-year sales declines.
Mortgage rate relief may have helped lift home sales in the West, Realtor.com Chief Economist Danielle Hale suggested, adding that "the West is closest to closing the sales gap," as home sales are just 1.4% below the pace from a year prior.