For many Americans, the dream of homeownership took a backseat in 2023. Existing home sales in the US hit a staggering 18.7% decline compared to 2022, marking the lowest annual sales volume since 1995. This dramatic shift wasn’t due to a lack of desire, but rather a perfect storm of factors that put the brakes on the housing market.
Rising Interest Rates: The culprit many point to is the surge in mortgage rates. In early 2023, rates soared, making monthly payments significantly more expensive for potential buyers. This, coupled with already high home prices, pushed affordability beyond reach for many.
Inventory Squeeze: The housing market also faced a persistent inventory shortage. The number of homes available for sale remained low, creating fierce competition and driving prices even higher. This limited selection made it difficult for buyers to find their dream home within their budget.
Double Whammy: The combination of rising rates and low inventory created a double whammy for buyers. They were stuck between paying a higher premium for a home or facing limited options altogether. This ultimately led many to postpone their homebuying plans.
A Glimpse of Hope: However, there are signs that the market might be thawing in 2024. Mortgage rates have started to come down, and some experts predict an increase in available homes. While a full recovery might take time, these developments offer a glimmer of hope for potential buyers who were priced out in 2023.
The Bottom Line: 2023 was a challenging year for the housing market, with home sales hitting a nearly 30-year low. While rising interest rates and low inventory played a significant role, there are signs that the tide might be turning. For those waiting on the sidelines, 2024 could bring more favorable conditions for achieving their homeownership dreams.
Thanks for reading,
Chris
