According to the National Association of Realtors (NAR), sales of existing homes which comprise the majority of the housing sales, have officially hit the lowest level since 1995 due to price inflation and interest rates for mortgages remaining very high.

December sales of existing homes dropped 1.0% when compared to November 2023 and fell a whopping 6.2% for the entire year.  The NAR reported 4.09 million homes were sold in 2023 which they attribute the major drop in sales to inflation, lack of supply, and skyrocketing interest rates.

The NAR Chief Economist Lawrence Run released a statement explaining, “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.”

American’s goal of owning a home became much more difficult in 2023 with the median existing-home price increasing by 4.4% to $382,600 by the end of December 2023.  The record median existing-home price in 2023 was set earlier in the year when the price hit $389,000 for a home. Sales for existing homes decreased in 2023 which in turn explains the rise of unsold homes from November to December 2023 by 11.5% or approximately 1 million homes remaining unsold.

On October 26, 2023, mortgage rates peaked at 7.79% which is a stark contrast to the beginning of 2021 where mortgage rates were 2.65% according to the Federal Reserve Bank of St. Louis.  The federal funds rate was continuously raised for the past few years in an effort to combat inflation and remains at a 22 year high of 5.25% and 5.5%.

Under President Joe Biden, the price of homes rapidly outpaced inflation and increased by 18.6% since the Biden administration assumed power.  As of December, the real estate sector is experiencing a 6.2% rise in prices when compared to 2022.