US home sales are at its lowest level this century

In 2023, sales of existing US homes fell to the lowest level in nearly three decades, as elevated interest rates and rising prices made homes less affordable, per a new report from the National Association of Realtors.

The NAR found sales of previously owned homes declined by 19% last year to reach 4.09 million. That figure, which represents the lowest total since 1995, is down sharply compared to the ~5.5 million average annual pace over the previous eight years.

• At the same time, median US home prices rose to a record $389,800 in 2023, driving overall home affordability to its lowest level since the NAR began tracking such data in 1989.

Driving the trend… Analysts say last year’s decline in home sales and increase in prices can be attributed to two main reasons:

1. The Fed’s recent historic streak of interest-rate hikes, which are reflected in mortgage rates (currently over 2x higher than the start of 2022).
2. A lower supply of available homes, which drives up prices.

But there are signs that home-buying activity is picking back up. US mortgage purchase applications rose this month to the highest seasonally adjusted level since July, per the Mortgage Bankers Association. The move is attributed to a recent decline in mortgage rates since October, with rates projected to fall even further and dip below 6% by the end of this year.

📊 Flash poll: Do you plan to buy or sell a home in the next year?

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