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Home Sales Were the Lowest in Almost 30 Years in 2023

I had dreamed that someday I'd build SanSnitzian a 500-acre sprawling Chateau in the Ozarks. Now I'm forced to live in a luxury tent.

Christ I can't even afford the retention pond.

Home Sales Were the Lowest in Almost 30 Years in 2023

High mortgage rates, prices made home buying prohibitively expensive for many last year

By Nicole Friedman, WSJ

Updated Jan. 19, 2024

Home sales last year dropped to the lowest level in nearly three decades, after elevated mortgage rates and a lack of homes for sale shut out buyers.

Existing-home sales slid 19% in 2023 from the prior year to 4.09 million, the National Association of Realtors said Friday. That total was lower than during the subprime crisis and the lowest full-year level since 1995. But the housing market is showing some signs of life as mortgage rates ease, and it’s possible that last year represented a bottom for sales activity.

After two years of soaring home sales that started during the pandemic as people sought more space and new locations, the housing market skidded to a halt in mid-2022.

Sales activity last year got off to a better-than-expected start, when mortgage rates retreated and some buyers rushed to take advantage of easing borrowing costs. Then rates began to rise again and the supply of homes for sale stalled at very low levels, keeping the market frozen.

Supply was so tight in part because many homeowners with low mortgage rates chose to stay put last year, determining it would be too expensive to buy another house at a higher interest rate.

That lack of inventory pushed home prices to record highs last year and made home purchases prohibitively expensive for many prospective buyers.

Some economists say home-buying activity is likely to pick up in 2024. With the Federal Reserve pivoting away from raising short-term interest rates and considering when to cut, mortgage rates have started to decline. The 30-year fixed-rate mortgage averaged 6.6% this week, the lowest level since May, according to Freddie Mac. Fannie Mae recently forecast that this rate will move below 6% by the end of the year.

People who postponed purchases last year due to the high rates may not be able to keep waiting. Millions of millennials are in the typical first-time home-buying age range.

“There’s so much latent demand in the market,” said Sam Khater, chief economist at Freddie Mac. “You have a lot of folks that are still trying to get up on the first rung of the housing ladder.”

Home-shopping activity has already started to tick up, real-estate agents say, as buyers look to take advantage of the lower rates. Mortgage rates have dropped more than a percentage point since October, when they rose to a 23-year high. Mortgage purchase applications rose in the week ended Jan. 12 to the highest seasonally adjusted level since July, according to the Mortgage Bankers Association.

If rates continue to fall, more homeowners who want to move but have feared paying a significantly higher mortgage rate on their next home may feel more comfortable listing their houses.

Stock prices are booming, the job market is strong and inflation is falling in the U.S. But consumer confidence remains historically low. Dion Rabouin explains why Americans might not be feeling all that confident. Photo: Victor J. Blue/Bloomberg News

“Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months,” said Lawrence Yun, NAR’s chief economist.

But the gap between the borrowing rate they have now and the rate they would pay on a new loan remains significant. That is likely to keep inventory lower than normal this year, economists say.

The lack of supply is keeping prices high. At the current sales pace, there was a 3.2-month supply of homes on the market at the end of December. Four to six months of supply is considered a balanced market.

“Even for folks that could continue to afford at higher rates, this drop in available inventory prevented them from participating in the housing market” in 2023, said Selma Hepp, chief economist at CoreLogic.

The last time existing-home sales were this low, in 1995, mortgage rates were mostly higher, standing between 7% and 9.5%. The median existing-home sales price in 1995 was $114,600, less than one-third of the December 2023 median price, according to NAR. The U.S. population was also much smaller, about 266 million in 1995, compared with about 336 million today, according to Census data.

Existing-home sales, which make up most of the housing market, fell 1% in December from the prior month to a seasonally adjusted annual rate of 3.78 million, the lowest monthly rate since August 2010. December sales fell 6.2% from a year earlier.

The national median existing-home price rose 4.4% in December from a year earlier to $382,600, NAR said.

Griffin and Jessica Fisher started looking to buy their first home outside of Atlanta because rents in their area were going up.

“I know the housing market isn’t really great, but I can’t really say that rent is great either,” Griffin Fisher said.

They bought a three-bedroom townhouse last month in Scottdale, Ga., for $315,000. “We’re super happy,” he said.

The typical home sold in December was on the market for 29 days, up from 26 days a year earlier, NAR said.

The share of first-time buyers in the market was 29% in December, down from 31% a year earlier. About 29% of December existing-home sales were purchased in cash, up from 28% in the same month a year ago, NAR said.

Shopping activity has increased since the start of the year, said Risa Corson, a real-estate agent in Closter, N.J.

“We definitely have seen renewed activity,” she said. “People are feeling a little more at ease, that the rates have come down a little. But there’s still some buyers that are a little wary.”

The decline in rates has also pushed up home-builder confidence. Builders benefited in 2023 from the shortage of existing homes on the market. A measure of U.S. home-builder confidence rose in January for the second consecutive month, the National Association of Home Builders said this week.

Housing starts, a measure of U.S. home building, fell 9% in 2023 from the prior year to 1.41 million, the Commerce Department said this week.

News Corp, owner of the Journal, also operates under license from NAR.

Write to Nicole Friedman at

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