Housing Market Recap 2023
The National Association of Realtors (NAR) reported that existing home sales fell 18.7% in 2023 to 4.09 million, making it the weakest year for home sales since 1995. It was also the biggest annual decline since 2007, the start of the housing slump of the late 2000s. The median national home price for all homes sold last year edged up just under 1% to a record high of $389,800.
Mortgage rates surged in 2023, climbing to a two-decade high of 7.08% by late October as the Federal Reserve continued to boost its key lending rate in a quest to cool the economy and tame inflation. Sharply higher mortgage rates and soaring prices combined to limit buying power, as potential sellers stayed put and potential buyers had less inventory to choose from.
Mortgage rates have been generally easing since November, echoing a pullback in the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield has largely come down on hopes that inflation has cooled enough for the Federal Reserve to shift to cutting interest rates this year. Analysts now expect rates to drop below 6% by the end of the year. The average rate remains sharply higher than just two years ago, when it was 3.56%.
The percentage of US homeowners with mortgage rates below 6% has fallen from a record high of 92.8% in mid-2022 to 88.5% at the end of 2023, according to Redfin. Even though many people feel locked in to their low rate, some will decide to move anyway. The 4% of homeowners who have decided to sell are generally dealing with a life event requiring them to move or want a different home or a different lifestyle more than they want to hang on to their low rate.
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