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Image: Monkey Business / Adobestock
Existing-home sales dropped in December 2023, according to the National Association of Realtors (NAR). However, the decline wasn’t consistent across the country, with sales down in the Midwest and South, up in the West, and unchanged from the month before in the Northeast. Every sales region recorded year-over-year sales decreases, with nationwide sales of 4.09 million units reaching the lowest level recorded since 1995. Yet despite the drop in sales, median prices increased.
Expert Insights into the Market
Experts predict that the sales declines in 2023 will represent the bottom of the market, with higher sales anticipated in the coming months. According to Lawrence Yun, chief economist for the NAR, the positive impacts of lower mortgage rates, combined with an expected increase in inventory, should boost sales in the new year. At the end of December, total housing inventory reached 1 million units, down 11.5% from a month earlier but up 4.2% from a year earlier. At the current sales pace, this level of inventory would supply the market for 3.2 months, down from a 3.5-month supply in November and up from a 2.9-month supply in December 2022.
Price Dynamics and Wealth Accumulation
In December, the median existing-home sales price climbed to $382,600, a 4.4% increase from a year ago. What’s more, every sales region posted price gains. With climbing prices, 85 million homeowning households are now accumulating wealth. However, warned Yun, the rapid pace of price increases will be unsustainable: “If price increases continue at the current pace, the country could accelerate into haves and have-nots. Creating a path toward homeownership for today’s renters is essential.” That path should include economic and income growth, combined with an investment in new-home construction.
December’s Market Activity Takeaways
The average property remained available for 29 days in December, according to the REALTORS Confidence Index, up from 25 days a month ago and 26 days a year ago. Of all the homes sold in December 2023, 56% were available for under one month. First-time buyers accounted for 29% of the market, down from 31% both a month ago and a year ago. According to the NAR “2023 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 32%. All-cash sales made up 29% of all transactions, up from 27% in November and 28% in December 2022. Individual investors and second-home buyers—who account for many all-cash purchases—were responsible for 16% of all December transactions, down from 18% a month ago and unchanged from a year ago.
Regional Breakdown
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Northeast: Existing-home sales annual rate of 470,000; unchanged from November 2023 but a decrease of 9.6% from December 2022. The median sales price of $428,100 represented a 9.4% increase from December 2022.
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Midwest: Existing-home sales annual rate of 900,000; a decrease of 4.3% from November 2023 and 10.9% from December 2022. The median sales price of $275,600 represented a 5.9% increase from December 2022.
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South: Existing-home sales annual rate of 1.72 million; a decrease of 2.8% from November 2023 and 4.4% from December 2022. The median sales price of $352,100 represented a 3.8% increase from December 2022.
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West: Existing-home sales annual rate of 690,000; an increase of 7.8% from November 2023 but a decrease of 1.4% from December 2022. The median sales price of $582,000 represented a 4.8% increase from December 2022.
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