Existing-home sales decreased 1% from November to a rate of 3.78 million in December, down 6.2% year-over-year, according to a new report from the National Association of REALTORS® (NAR). 2023’s total reading of 4.09 million sales is the lowest level in 30 years, while the median price reached a record high of $389,800 in 2023.
NAR’s Existing Home Sales report for December found that total housing inventory was 1 million units, down 11.5% from November, but down 4.2% from one year ago (960,000). Unsold inventory sits at a 3.2-month supply at the current sales pace, down from 3.5 months in November, but up from 2.9 months last year. The median existing-home price for all housing types was $382,600, an increase of 4.4% from November 2022 ($366,500).
Properties typically remained on the market for 29 days in December, up from 25 days in November and 26 days in 2022. Fifty-six percent of homes sold were on the market for less than a month.
First-time buyers were responsible for 29% of sales, down from 31% in November and in 2022. NAR’s 2023 Profile of Home Buyers and Sellers found that the annual share of first-time buyers was 32%.
All-cash sales accounted for 29% of transactions, up from 27% in November and from 28% in 2022. Individual investors or second-home buyers (who make up many cash sales) purchased 16% of homes, down from 18% in November and identical to 2022.
Distressed sales—foreclosures and short sales—represented 2% of sales, virtually unchanged from last month and the previous year.
Single-family home sales declined to an annual rate of 3.4 million, down 0.3% from 3.41 million in November and 6.1% from 2022. The median price was $387,000, up 4% from 2022.
Existing condominium and co-op sales declined 7.3% from September to an annual rate of 380,000, down 7.3% from one year ago. The median price was $343,800, up 8.2% from 2022.
Regionally, all four regions experienced year-over-year sales decreases, but saw year-over-year price increases.
Sales in the Northeast were unchanged from November’s rate of 470,000, but were down 9.6% from 2022. The median price was $428,100, up 9.4% from the previous year.
At an annual rate of 900,000, sales in the Midwest fell 4.3% from the prior month and were down 10.9% from one year ago. The median price was $275,600, up 5.9% from 2022.
Sales in the South retracted 2.8% from November to an annual rate of 1.72 million, a decline of 4.4% from the previous year. The median price was $352,100, up 3.8% from last year.
In the West, sales grew 7.8% from the prior month to an annual rate of 690,000, but were down 1.4% from one year ago. The median price was $582,000, up 4.8% from 2022.
The takeaways:
NAR Chief Economist Lawrence Yun commented: “The latest month’s sales look to be the bottom before inevitably turning higher in the new year. Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”
Yun concluded, “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 toward homeownership for today’s renters is essential. It requires economic and income growth and, most importantly, a steady buildup of home construction.”
Dr. Selma Hepp, chief economist at CoreLogic, commented: “Existing-home sales are showing that the market is still cool, but not completely frozen. But an early look into new contracts signed suggests that existing home sales are on the rebound and will improve this year. The bad news is that home affordability is not likely to improve for potential homebuyers, so those looking to buy a home should make an offer before the spring home-buying season starts.”
Realtor.com® Chief Economist Danielle Hale commented: “Existing-home sales slipped in December. Mortgage rates tumbled from late October through the end of the calendar year and likely kept sales from slipping further. Even though pending home sales, which mark an earlier stage in the transaction process and tend to lead existing-home sales by a month or two, steadied in November, high costs stemming from high prices and mortgage rates continue to remain a challenge for many shoppers. For the year as a whole, existing-home sales totaled 4.09 million, slightly above our late-year projection.”
Hale continued, “A recent realtor.com® study found that as the housing market slowed in 2023, investors also pulled back as costs soared and rents softened. With rents continuing to ease and more multi-family homes entering the market for rent, investors may continue to tread more cautiously in the housing market. This would mean one less source of competition for potential first-time homebuyers who are approaching the 2024 market with optimism despite the challenge of trying to buy a home at a below-median price point, one that investors also often target. Mortgage rates will continue to remain a wild card for home shoppers. Although mortgage rates dropped further this week, stronger readings on inflation, which came in higher than expected in December, surprisingly strong retail sales data, and lower than expected jobless claims figures have already pushed up 10-year yields and could cause a similar reaction in mortgage rates.”
