December 2023 Housing Market Hits Lowest Point Since 2010 with Median Home Price at $382,600

Diccon Hyatt, a seasoned financial and economics journalist, has extensively covered the pandemic-era economy through hundreds of clear and insightful reports. His work focuses on how economic trends affect personal finances and the broader market, with experience at U.S. 1, Community News Service, and the Middletown Transcript.

Highlights

• December 2023 home sales dropped 1% from November, reaching the lowest annualized rate since 2010.
  
• High mortgage rates, peaking near 7.79% in late October, significantly suppressed buyer demand during contract signings for December sales.
  
• Recent declines in mortgage rates to around 6.60% offer hope for improved affordability and increased sales in 2024.
  

In December 2023, the U.S. housing market experienced a notable slowdown, with existing home sales decreasing by 1% compared to November, settling at a seasonally adjusted annual rate of 3.78 million—the lowest since 2010, according to the National Association of Realtors (NAR). This downturn defied economists’ expectations of a modest rise, signaling persistent challenges in the market.

The contracts for homes sold in December were largely signed when mortgage rates were at their peak in over two decades, reaching an average of 7.79% for a 30-year fixed mortgage at the end of October. These elevated borrowing costs priced many prospective buyers out of the market. However, mortgage rates have since fallen to approximately 6.60%, raising optimism for a market rebound.

Lawrence Yun, NAR’s chief economist, remarked, “December’s sales figures likely represent the market bottom, with a rebound anticipated in 2024. The recent decline in mortgage rates and an expected increase in housing inventory should support this recovery.”

Inflation pressures have eased, prompting expectations that the Federal Reserve will soon pause or reverse interest rate hikes, further contributing to lower mortgage rates. This shift is critical because many homeowners have been reluctant to sell, unwilling to give up low-rate mortgages secured during the pandemic, which has constrained inventory and kept home prices elevated.

First-time buyers faced significant challenges entering the market throughout 2023, with affordability strained by high prices and borrowing costs. December saw the median home price reach $382,600—the highest December figure on record in NAR’s data, which is not seasonally adjusted.

Looking ahead, analysts predict that continued mortgage rate declines and increased housing supply will enhance affordability and stimulate buyer activity in 2024, potentially ending the market stagnation experienced in recent years.

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