Norada Real Estate Investments

Current Housing Market Trends in 2023

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Current Housing Market Trends

The real estate housing market is a complex and dynamic industry that is constantly evolving. While the future is unpredictable, current trends can provide insights into what we can expect in the housing market. The housing market is expected to be a balanced market in 2023, but the answer to the question “Is it a buyers or sellers market?” will vary depending on the location.

Current Housing Market Trends in 2023

Buyers may have more leverage in negotiations in 2023, but the market is still competitive in many areas. The housing market has been cooling down in 2023, but it's still too early to say whether it will be a buyers or sellers market. Some areas are becoming more buyer-friendly and others remain seller-friendly.

Here are some factors that are contributing to this shift in the housing market to become more buyer-friendly:

  • Rising interest rates: Mortgage rates have been rising steadily since the beginning of the year, making it more expensive for buyers to finance a home. This is expected to slow down demand and give buyers more leverage in negotiations.
  • Rising inflation: Inflation is also on the rise, which is making it more expensive for everyone to live, including homeowners. This could lead to some sellers being more willing to sell their homes at a lower price.
  • Increasing inventory: The supply of homes for sale is slowly starting to increase, which is also giving buyers more options.

In this article, we will discuss the key trends that are expected to shape the housing market in the coming years, along with the potential impact of each trend.  The cooling of the housing market could be terrible news for sellers, but for buyers, it's great. Yet there is still the problem of sky-high mortgage rates.

The bright side is that if buyers hold off, the supply of homes will increase, putting further pressure on sellers to decrease prices. This would constitute a long-overdue course correction for the housing market. Mortgage rates are skyrocketing. Home sales are declining. Supply is improving. We are witnessing a sharp slowdown in the housing market due to higher mortgage rates.

Housing Market Trend #1: Increasing Demand for Affordable Housing

The demand for affordable housing is one of the most pressing issues in the housing market. The rise in housing prices, combined with stagnant wages, has made it difficult for many individuals and families to find safe and secure housing. In 2023, it is expected that access to affordable housing will continue to be a challenge. Innovative solutions will be necessary to address this issue and provide affordable housing options for those in need.

Housing Market Trend #2: Shift toward Suburban and Rural Areas

The COVID-19 pandemic has caused many people to reevaluate their living arrangements, with larger homes and more space becoming increasingly important. This shift in priorities could result in a greater demand for housing in suburban and rural areas, leading to higher prices. This trend is expected to continue in 2023, especially as remote work becomes more prevalent.

Housing Market Trend #3: Rising Home Prices

Despite the economic impact of the pandemic, housing prices have continued to rise due to limited supply and high demand. While this is good news for homeowners, it could make it more difficult for some individuals to enter the housing market. The trend toward rising home prices is expected to persist in 2023, particularly in urban areas where the supply is limited.

Housing Market Trend #4: Stricter Mortgage Standards

As the economy recovers and interest rates rise, mortgage lenders may become more cautious about who they lend to. This could make it more difficult for some individuals to qualify for a mortgage and realize their dream of homeownership. Stricter mortgage standards are a potential barrier for those seeking to enter the housing market.

Trend #5: Increased Investment in Technology

The pandemic has accelerated the adoption of technology in the real estate industry, with virtual home tours and digital transactions becoming more common. This trend is expected to continue in 2023, with technological investments helping to streamline the home buying and selling process. Technology could also play a role in addressing the challenge of affordable housing, with innovations such as modular homes and 3D printing.

Hence, the housing market in 2023 will be shaped by economic, social, and technological factors. While predicting the future is never easy, understanding these trends can help individuals and policymakers make informed decisions about the housing market. It is important to address the challenge of affordable housing, as well as the potential barriers to homeownership such as rising home prices and stricter mortgage standards. Technological innovations are also likely to play a critical role in shaping the housing market in the coming years. By keeping these trends in mind, stakeholders can work towards creating a housing market that is equitable, accessible, and sustainable for all.

US Housing Market Trends in August 2023

The real estate market in August witnessed a 0.7% decline in existing home sales, portraying a seasonally adjusted annual rate of 4.04 million. This analysis delves into the critical aspects of this decrease and its implications for the real estate landscape.

Key Highlights

Here are the key highlights from the August report by the National Association of Realtors® (NAR):

  • Sales Downturn: Existing-home sales experienced a 0.7% decline in August, resulting in a seasonally adjusted annual rate of 4.04 million. Additionally, sales showed a significant year-over-year drop of 15.3% compared to August 2022.
  • Median Price Increase: The median sales price for existing-homes rose by 3.9% from the previous year, reaching $407,100. This marks the third consecutive month where the median sales price has surpassed the $400,000 threshold.
  • Inventory Status: The inventory of unsold existing homes witnessed a 0.9% decrease from the previous month, resulting in 1.1 million units available at the end of August. This corresponds to a 3.3 months' supply at the current monthly sales pace.

Regional Variations

Regional disparities were evident in August's existing-home sales:

  • Midwest: Sales improved by 1.0% compared to the previous month but decreased by 16.4% from the prior year.
  • Northeast: Sales remained unchanged from July but witnessed a substantial year-over-year decline of 22.6%.
  • South: Sales decreased by 1.1% from July, resulting in a 12.4% drop from one year ago.
  • West: Existing-home sales in the West slumped by 2.6% from the previous month and declined by 15.7% from the prior year.

Market Insights and Analysis

NAR Chief Economist Lawrence Yun remarked on the stability of home sales over the past few months, highlighting the role of mortgage rate fluctuations and job gains in influencing short and long-term market trends. Despite the sales downturn, home prices continued to rise, underscoring the urgent need to augment housing supply to moderate these price gains.

Market Participants and Trends

Insights into market participants and trends for August:

  • First-Time Buyers: First-time buyers constituted 29% of the sales in August, marking a slight decrease from July. This percentage remained identical to the figures from August 2022.
  • All-Cash Sales: All-cash transactions accounted for 27% of the total transactions in August, indicating a rise from both July and August 2022.
  • Distressed Sales: Distressed sales, including foreclosures and short sales, remained consistent at 1% of total sales in August, unchanged from the previous month and the previous year.

Mortgage Rate Trends

As of September 14, Freddie Mac reported a 30-year fixed-rate mortgage averaging 7.18%, showcasing a notable increase from the prior week and a substantial rise from one year ago.

The real estate market in August continued to grapple with a sales downturn, highlighting the need for strategic interventions to bolster market activity. Efforts to stabilize mortgage rates and stimulate job growth can potentially provide the necessary impetus for a more robust market performance in the coming months.

More on Regional Housing Market Trends

The existing-home sales data for August provides a comprehensive view of the real estate market across different regions in the United States. Here's a breakdown of the housing market performance in the four major regions:

Northeast

In August, existing-home sales in the Northeast were reported at an annual rate of 480,000, remaining unchanged from July but displaying a significant decline of 22.6% compared to August 2022. Despite this decline in sales, the median home price in the Northeast increased by 5.8% from one year ago, reaching $465,700.

Midwest

Contrary to the trend in the Northeast, the Midwest witnessed a 1.0% increase in existing-home sales from the previous month, resulting in an annual rate of 970,000 in August. However, when compared to the previous year, there was a notable decline of 16.4% in sales. Despite this, the median home price in the Midwest showed resilience, experiencing a 6.8% increase from August 2022, reaching $305,300.

South

Existing-home sales in the South saw a slight decline of 1.1% from July, resulting in an annual rate of 1.84 million in August. This represents a 12.4% decrease in sales from one year ago. In contrast to the sales decline, the median home price in the South increased by 3.2% compared to August 2022, reaching $366,100.

West

The Western region experienced a 2.6% decline in existing-home sales from the previous month, reporting an annual rate of 750,000 in August. When compared to the prior year, there was a significant decline of 15.7% in sales. Despite this sales downturn, the median home price in the West exhibited a modest increase of 1.0% from August 2022, reaching $609,300.

These regional variations in both sales and median home prices shed light on the diverse dynamics of the housing market in different parts of the country. Understanding these trends is crucial for both homebuyers and sellers to make informed decisions in their respective real estate transactions.

Real Estate Housing Market Trends
Source: N.A.R.

New Home Sales Trends: A Comprehensive Analysis

According to a joint report from the US Department of Housing and Urban Development and the Census Bureau, in July, new home sales surged, surpassing expectations and achieving a 17-month high. This rise is attributed to buyers turning towards new construction due to the severely limited supply of existing homes. Sales of newly constructed homes increased by 4.4% in July, reaching a seasonally adjusted annual rate of 714,000, up from a revised rate of 684,000 in June. Compared to the previous year, sales saw an impressive increase of 31.5%.

Market Dynamics and Affordability Concerns

While the new construction market benefits from the scarcity of inventory, concerns about affordability persist. Homeowners with existing mortgage rates of 3% or 4% are hesitant to sell and purchase a new home at significantly higher rates. Mortgage rates recently exceeded 7% and are not anticipated to decrease in the near future.

Regional Variations and Market Fluctuations

New home sales in July exhibited regional disparities, reflecting local price and inventory fluctuations. Sales in the Midwest surged by an impressive 47.4% from the previous month, while the West experienced a notable increase of 21.5% from June. In contrast, sales in the Northeast declined by 2.9% from the previous month and dropped by 6.3% in the South.

Pricing Trends

The pricing dynamics in the new home market are notable. While prices of existing home sales are on the rise, with the price for a single-family home at $412,300 in July (up 1.6% from a year ago according to the National Association of Realtors), the median price of new homes sold in July witnessed a decrease of 8.6%, reaching $436,700 from $478,200 a year ago.

Inventory and Supply

Inventory and supply are critical aspects influencing the new home market. At the end of July, there were 437,000 new homes available for sale, equivalent to about 7.3 months of supply at the current sales rate, according to the Census Bureau report. Although this is less than half of the available inventory of existing homes in July (about 1.1 million), new home inventory has been gradually increasing in recent months. However, it still remains 4.8% below last year's level.

Benefits for Homebuyers in 2023's Housing Market

There are a few potential benefits for homebuyers in the current real estate housing market:

  • More choices: While the supply of homes on the market is still relatively low, it has increased slightly in recent months. This means that potential homebuyers may have more options to choose from when looking for a home. The number of new homes available on the market also increased in February, which means that potential homebuyers have more options to choose from.
  • Slower price growth: Although home prices are still rising, the pace of growth has slowed down in some areas. This could make it easier for homebuyers to afford a home in certain markets.
  • Easier negotiations: In a slower housing market, sellers may be more willing to negotiate on the price of their home or other terms of the sale. This could give homebuyers more bargaining power and help them get a better deal on a home.
  • Lower prices: While the median price of a new home rose slightly from a year ago, the increased inventory could lead to greater competition among sellers, potentially driving down prices.
  • Leading indicator: New home sales are considered a leading indicator for the housing market, meaning that an increase in new home sales could signal a positive trend for the housing market overall. This could be good news for potential homebuyers who may be hesitant to enter the market during a downturn.

Looking ahead to the remainder of 2023 in the US housing market, key trends and factors will shape the real estate landscape. These include the influence of interest and mortgage rates on buyer demand, the persistent challenge of limited housing inventory, steady growth in home prices, and concerns over affordability for potential buyers.

Generational shifts and the impact of remote work will also shape housing preferences, while government policies and regional variations will contribute to market dynamics. Overall, staying informed and adaptable will be crucial for navigating the evolving housing landscape in the coming months.

One key factor to watch is the potential impact of policy considerations, such as a temporary reduction in capital gains tax on investment property sales. If implemented, this measure could stimulate the market by increasing housing inventory, sales, and overall economic growth. Policymakers will need to carefully evaluate and balance the potential benefits of such measures against any unintended consequences.

Addressing the challenges of housing inventory and supply levels will be critical moving forward. Collaborative efforts among policymakers, industry professionals, and stakeholders will be necessary to find sustainable solutions. Encouraging an increase in housing inventory will help meet the demand from prospective buyers and potentially stabilize prices.

Localized data and insights will continue to be essential for making informed decisions. Consulting with local associations of REALTORS® and utilizing data from local multiple listing services (MLS) can provide accurate and detailed information specific to particular areas. This will help individuals and businesses navigate market conditions effectively and make strategic choices.

Monitoring forthcoming releases of key indicators, such as the Pending Home Sales Index and Existing-Home Sales data, will offer valuable insights into the evolving trends and dynamics of the real estate market. Staying informed and adaptable to changing conditions will be crucial for making well-informed decisions and seizing opportunities in this dynamic landscape.

While challenges persist, the real estate market also presents opportunities for growth and investment. With careful analysis of market conditions, consideration of policy measures, and collaboration among industry stakeholders, the real estate sector can strive toward a more balanced and sustainable future in the latter half of 2023.

Sources:

  • https://www.realtor.com/research/
  • https://www.zillow.com/home-values/
  • https://www.bankrate.com/mortgages/todays-rates/
  • https://www.nar.realtor/research-and-statistics/housing-statistics/
  • https://www.nar.realtor/research-and-statistics/housing-statistics/housing-affordability-index

New Home Sales: Report, Charts, Forecast 2023

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new home sales
Source: U.S. Census Bureau

New Home Sales, commonly referred to as “new residential sales,” is an economic indicator that tracks the sale of newly constructed residences. It is extensively watched by investors since it is seen as a lagging signal of real estate market demand and, thus, a factor influencing mortgage rates. Household income, unemployment, and interest rates are all variables that influence it.

The United States Census Bureau releases two versions of the New Home Sales metric: a seasonally adjusted figure and an unadjusted one. The adjusted value is shown as a yearly total, whereas the unadjusted figure is presented as a monthly total. These numbers are provided for several areas and the entire nation.

New home sales are completed when a sales contract or deposit is signed or accepted. In any stage of construction, the home might be: not yet started, in the process of being built or fully finished. About 10% of the US housing market is made up of new house sales. Preliminary numbers for new single-family home sales are subject to major changes because they are mostly based on data from construction permits.

New Home Sales Reach 17-Month High in July 2023

The real estate market is in a constant state of flux, influenced by a myriad of factors including supply and demand, mortgage rates, and economic conditions. In a surprising turn of events, new home sales in the United States have soared to a 17-month high in July, defying expectations and providing insight into the preferences of today's homebuyers. This surge is particularly noteworthy considering the challenges posed by an ongoing shortage of existing homes.

A Significant Upward Trend

In a joint report from the US Department of Housing and Urban Development and the Census Bureau, it was revealed that sales of newly constructed homes increased by an impressive 4.4% in July. This brought the seasonally adjusted annual rate to 714,000, up from a revised rate of 684,000 in June. Moreover, these sales figures demonstrated a remarkable year-over-year increase of 31.5%. This trend is highly encouraging for the housing market, but it begs the question: What is propelling this surge in new home sales?

Coping with Low Inventory

The housing market has been grappling with a shortage of available homes for quite some time. The scarcity of existing homes has led many buyers to explore new construction as a viable option. With historically low inventory levels in the existing home market, new homes offer a fresh alternative. However, it's important to note that despite the surge in sales, concerns about affordability persist.

Affordability Concerns Amidst Rising Mortgage Rates

One key factor affecting the real estate market's dynamics is the rise in mortgage rates. While the allure of new homes is enticing, homeowners with mortgage rates of 3% or 4% may be hesitant to sell their current homes and acquire new ones at significantly higher rates. This apprehension is exacerbated by recent mortgage rates exceeding 7%, with little indication of a decrease in the near future. This dynamic creates a complex interplay between buyer demand and affordability, shaping the market's trajectory.

The New Homes Advantage

An interesting facet of this trend is the comparative advantage that new homes seem to hold over existing homes. Despite higher mortgage rates and prices, new home sales appear less competitive due to the lack of inventory in the existing home market. The scarcity of available housing options has allowed new construction to thrive, as buyers seek out fresh floor plans, improved energy efficiency, and warranties that accompany new homes. Kelly Mangold of RCLCO Real Estate Consulting observes, “Household formation continues to outpace new construction which has continued to bolster the market despite the multitude of headwinds.”

Regional Variations and Market Fluctuations

Sales of new homes in July exhibited significant variations across different regions of the United States. While the Midwest experienced a staggering 47.4% surge in sales from the previous month, the West saw a substantial increase of 21.5% in sales. In contrast, the Northeast saw a decline of 2.9%, and the South experienced a more pronounced drop of 6.3%. These regional disparities reflect local price and inventory fluctuations, underscoring the nuanced nature of the real estate market.

The Price Puzzle: New vs. Existing Homes

The pricing dynamics between new and existing homes add another layer of complexity to the market. Although the median price of existing homes increased by 1.6% year-over-year, reaching $412,300 in July, the median price of new homes sold in the same period experienced an 8.6% decrease to $436,700. This intriguing pricing differential raises questions about the considerations that drive buyers to opt for new construction despite the higher affordability hurdles in the broader market.

The Role of Inventory

Inventory is a pivotal factor in understanding the current state of the housing market. At the end of July, approximately 437,000 new homes were available for sale, equating to around 7.3 months of supply at the current sales rate. While this figure pales in comparison to the existing home inventory, which stood at about 1.1 million units in July, it's essential to recognize that new home inventory has been gradually increasing over the past few months. Despite this uptick, the inventory of new homes remains 4.8% lower than the previous year's level.

Incentives and Future Trends

Builders are leveraging the shortage of resale inventory to their advantage. Incentives play a crucial role in enticing buyers to opt for new homes. These incentives can encompass mortgage rate buy-downs, point payments, price reductions, and even upgraded appliances and interior features. The competition between new and existing homes is pushing builders to innovate and cater to the needs of affordability-conscious consumers.

The Path Ahead

As the housing market continues to evolve, the surge in new home sales signals a fascinating shift in buyer preferences amidst challenging market conditions. The interplay between historically low inventory, affordability concerns, and the allure of fresh features underscores the dynamic nature of the real estate landscape. Whether this trend will be sustained or if other factors will come into play remains to be seen. As the market navigates these uncertainties, both buyers and builders will need to adapt to the ever-changing conditions to make the most of the opportunities at hand.

New Home Sales Regional Data July 2o23

Region New Homes Sold
North-East 33,000
Mid-West 84,000
South 416,000
West 181,000

North-East: 33,000 New Homes Sold

The North-East region of the United States, known for its historical significance and bustling urban centers, witnessed the sale of 33,000 new homes. However, this figure also reflected a decline of 2.9% from the previous month. While the North-East showcases the allure of city living and a rich cultural heritage, it seems to be grappling with unique challenges that have influenced its new home sales figures.

Mid-West: 84,000 New Homes Sold

The Mid-West region, characterized by its diverse landscapes and strong sense of community, experienced a robust surge in new home sales, with a staggering 84,000 units sold. This remarkable increase of 47.4% from the prior month paints a picture of a region where buyers are embracing new construction as an attractive option. The Mid-West's combination of affordability and quality of life appears to be resonating well with prospective homeowners.

South: 416,000 New Homes Sold

The South, with its warm climate, economic opportunities, and diverse cultures, emerged as a dominant player in the new home sales arena. Boasting a whopping 416,000 new homes sold, the South exhibited an increase of 21.5% from the previous month. This surge is a testament to the region's strong demand for housing and the value it places on homeownership. The South's robust economic growth and job opportunities likely contribute to its vibrant real estate market.

West: 181,000 New Homes Sold

The West, known for its stunning natural landscapes and innovation hubs, also showcased a notable increase in new home sales. With 181,000 new homes sold, the region experienced a rise of 21.5% from the prior month. The appeal of the West's modern lifestyle and thriving tech and creative industries may be driving the demand for new homes. However, it's worth noting that despite the increase, the West's sales figures still lag behind those of the South.

Unveiling Insights and Implications

The variations in new home sales across these four regions underscore the importance of local dynamics in shaping the housing market. Several factors contribute to these fluctuations:

  • Economic Factors: Economic conditions, including job growth and income levels, can greatly influence housing demand. The South's strong job market and economic opportunities likely contribute to its high sales figures.
  • Affordability: Affordability remains a critical factor in housing choices. The Mid-West's affordability compared to other regions could explain its remarkable surge in new home sales.
  • Cultural Preferences: Regional cultures and lifestyle preferences play a role in shaping housing choices. The urban appeal of the North-East and the modern lifestyle of the West could impact the demand for new homes.
  • Climate and Geography: Climate and geography also play a role in housing preferences. The warm climate of the South could be a driving factor behind its robust sales figures.

New Home Sales Trend [Previous Months]

Here's the region-wise tabular data for new home sales from March 2022 to March 2023. The units displayed are in thousands and are the seasonally adjusted annual rate. The data estimates only include new single-family residential structures. Sales of multi-family units are excluded from these statistics.

NORTHEAST: Connecticut, Maine, Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont

MIDWEST: Illinois, Iowa, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska North Dakota Wisconsin South Dakota Ohio

SOUTH: West Virginia, Virginia, Texas, Tennessee, South Carolina, Oklahoma, North Carolina, Mississippi, Maryland, Louisiana, Kentucky, Georgia, Florida, Alabama, Delaware, District of Columbia, Arkansas

WEST: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming

Sources

  • https://www.census.gov/
  • https://www.census.gov/construction/nrs/pdf/newressales.pdf
  • https://www.mortgagenewsdaily.com/data/new-home-sales
  • https://www.nahb.org/news-and-economics/housing-economics/national-statistics/new-and-existing-home-sales-reports

Historical Home Sales Data in the United States

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Historical Home Sales

Historical Home Sales

The market for existing home sales in the United States has witnessed significant fluctuations and trends over the years. Understanding the historical context and recent developments is crucial for both buyers and sellers. Let's delve into the data and trends regarding existing home sales in the U.S.

Historical Averages

From 1968 to 2023, existing home sales in the United States have averaged approximately 4,065.91 thousand transactions annually. This long-term average reflects the overall stability of the real estate market in the country.

Highs and Lows

The highest number of existing home sales in the U.S. was recorded at 7,250 thousand transactions in September 2005. This peak was associated with the housing boom that preceded the 2008 financial crisis. On the other end of the spectrum, the lowest number of sales occurred in March 1970, with only 1,370 thousand transactions.

Recent Trends

In 2022, the U.S. saw 5 million housing transactions completed, marking a decrease from the previous year when 6.12 million transactions were recorded in 2021. This decline suggests a cooling down of the real estate market.

The trend continued into the first five months of 2023. As of May 2023, the annual number of single-family and condo or co-op transactions stood at approximately 4.3 million. This indicates that the market continued to experience a slowdown in activity compared to previous years.

July 2023: A Closer Look

July 2023 brought further challenges to the existing home sales market. Sales fell by 2.2% to a seasonally adjusted annual rate of 4.07 million transactions. This decline represents a significant 16.6% decrease compared to the same month in the previous year.

One noteworthy aspect is the nationwide median sale price, which currently stands at $406,700. This figure is just a few thousand dollars short of the all-time high. The high median sale price indicates that despite a slowdown in sales, the real estate market remains competitive, and prices continue to be robust.

Home Sales Data: July 31, 2021 – July 31, 2023

Here is the tabular data on home sales between June 30, 2019, and June 30, 2021, and between June 30, 2019 and June 30, 2021. It shows the corresponding home sales figures that tell a story of market fluctuations and resilience.

Date Value
July 31, 2023 4.07M
June 30, 2023 4.16M
May 31, 2023 4.30M
April 30, 2023 4.29M
March 31, 2023 4.43M
February 28, 2023 4.55M
January 31, 2023 4.00M
December 31, 2022 4.03M
November 30, 2022 4.12M
October 31, 2022 4.44M
September 30, 2022 4.68M
August 31, 2022 4.77M
July 31, 2022 4.88M
June 30, 2022 5.13M
May 31, 2022 5.40M
April 30, 2022 5.57M
March 31, 2022 5.69M
February 28, 2022 5.92M
January 31, 2022 6.34M
December 31, 2021 6.09M
November 30, 2021 6.33M
October 31, 2021 6.19M
September 30, 2021 6.18M
August 31, 2021 5.99M
July 31, 2021 6.03M

 

Date Value
June 30, 2021 5.97M
May 31, 2021 5.92M
April 30, 2021 5.96M
March 31, 2021 6.04M
February 28, 2021 6.17M
January 31, 2021 6.65M
December 31, 2020 6.65M
November 30, 2020 6.59M
October 31, 2020 6.73M
September 30, 2020 6.44M
August 31, 2020 5.97M
July 31, 2020 5.90M
June 30, 2020 4.77M
May 31, 2020 4.01M
April 30, 2020 4.37M
March 31, 2020 5.35M
February 29, 2020 5.70M
January 31, 2020 5.41M
December 31, 2019 5.53M
November 30, 2019 5.32M
October 31, 2019 5.41M
September 30, 2019 5.41M
August 31, 2019 5.43M
July 31, 2019 5.39M
June 30, 2019 5.32M

U.S. Existing Home Sales 2005-2023: An Overview

According to the Statista Research Department report published on July 12, 2023, the trajectory of existing home sales in the United States from 2005 to 2023 has been a rollercoaster ride, with fluctuations driven by a multitude of factors. Here is an in-depth analysis of this journey, shedding light on recent trends and addressing the burning questions surrounding the real estate market.

A Shift in Home Sales: 2021 to 2022

In 2022, the U.S. witnessed a significant change in the landscape of home sales. After a surge in the previous year, the number of home sales declined, marking a shift from the trend observed since 2020. A total of five million housing transactions were completed in 2022, down from the robust 6.12 million recorded in 2021. This change brought the market closer to pre-pandemic levels, raising questions about the factors behind this shift.

Factors Behind the Decline

The housing boom experienced during the coronavirus pandemic underscored the enduring allure of homeownership as part of the American dream. However, sentiment among potential buyers declined notably in the second half of 2022. Across all generations, Americans increasingly felt that the timing was not right to buy a home.

Several factors converged to make homeownership less accessible to the average buyer. One significant challenge was the soaring house prices, which made owning a home financially out of reach for many. A survey conducted among both owners and renters revealed that the two primary barriers to home purchases in the third quarter of the year were high home prices and unfavorable economic conditions.

Aspiring homeowners faced the daunting task of saving up a substantial deposit, maintaining a good credit score, and securing a steady and sufficient income to qualify for a mortgage. Additionally, the real estate landscape was significantly impacted by the most aggressive increase in mortgage rates in history, driving up the total cost of homeownership. Shockingly, only 15 percent of U.S. renters found themselves in a position to afford becoming homeowners, and in highly competitive housing markets like Los Angeles, CA, and Urban Honolulu, HI, this number plummeted to below five percent.

The Outlook for Home Prices

The median sales price of existing homes reached 391,500 U.S. dollars in the third quarter of 2022. While it was forecasted to experience a slight decline until the fourth quarter of 2023, the actual trajectory of home prices demonstrated a degree of volatility. The S&P/Case Shiller U.S. National Home Price Index revealed a seven-month decline between June 2022 and January 2023, followed by a reversal in the trend in subsequent months.

Despite mild fluctuations, many metros anticipate continued growth in home prices, albeit at a slower pace. The chronic shortage of newly built homes to meet the high demand has resulted in a market that remains undersupplied. This scenario makes a dramatic decline in house prices unlikely, indicating that the real estate market will continue to be characterized by resilience and adaptability.

In conclusion, the U.S. existing home sales market from 2005 to 2023 reflects the ever-changing dynamics of the real estate sector, influenced by economic, demographic, and financial factors. While recent years have seen fluctuations, the enduring aspiration of homeownership and the complexities of affordability continue to shape the market's landscape.

Historical Housing Units: A Tale of Growth and Trends

According to the Statista Research Department report published on July 12, 2022, the number of housing units has consistently risen year by year, with historical home sales reflecting the ever-changing landscape of homeownership. Let's explore the journey of housing units in the U.S. from 1975 to 2021.

A Growing Inventory

As of 2021, the United States boasted approximately 142 million housing units, representing a continuous upward trajectory. This marked an increase of over one million units compared to the previous year when the total housing stock stood at 140.8 million units.

This steady increase in the number of housing units speaks to the nation's commitment to providing a place to call home for its citizens, a fundamental component of the American Dream.

Shifting Housing Trends

While the growth in housing units has remained consistent, notable shifts have occurred in the type of housing occupancy—either owner-occupied or renter-occupied. In the years following the financial crisis, the number of owner-occupied units experienced a stall, while the number of renter-occupied units was on the rise. This trend suggested a shift away from traditional homeownership.

However, in recent years, this trend has reversed course, underscoring the enduring importance of homeownership as an integral part of the American Dream. The desire to own a piece of the American dream remains strong.

Homeownership and Housing Transactions

The dynamics of housing in the U.S. have been further influenced by housing transactions. In 2020, the number of home sales experienced a notable spike, surpassing levels last seen in 2007. Despite the economic uncertainty brought about by the coronavirus (COVID-19) pandemic, many Americans have become more determined to realize their homeownership plans than ever before.

These trends in housing transactions reaffirm the resilience of the U.S. housing market. Even in challenging times, the aspiration to own a home remains a powerful driving force, a testament to the enduring legacy of historical home sales in the United States.

Historical Data of New Housing Units Sold in the U.S.

The story of new housing units sold in the United States from 1995 to 2022 is one of resilience, transformation, and evolving consumer preferences. Here are the dramatic shifts in the market, from the fallout of the financial crisis to the surge in demand during the pandemic.

The Financial Crisis and Recovery

The real estate market in the United States faced a significant upheaval during the financial crisis. The number of new houses sold plummeted from a peak of approximately 1.3 million in 2005 to a mere 306 thousand in 2011, marking a staggering 76 percent decrease. This tumultuous period underscored the vulnerabilities in the housing sector (Published by Statista Research Department, Feb 10, 2023).

While the economy has largely recovered since the crisis, consumers remained cautious about venturing into the housing market. However, a resurgence was on the horizon.

The Surging Demand in 2020 and 2021

The housing market experienced a remarkable turnaround in 2020 and 2021, as demand for housing surged. The number of new house sales volumes spiked to 822,000 and 770,000 respectively, reflecting a renewed vigor among prospective homebuyers.

But what fueled this resurgence in demand?

Factors Driving Demand

The surge in demand for housing coincided with the COVID-19 pandemic, which had profound effects on the housing market. Many Americans found themselves more interested in buying a home due to the pandemic. The quest for comfortable and secure living spaces became a priority, prompting a surge in demand for new houses.

Preferred Home Types and Locations

When it comes to the types of homes Americans are buying, detached single-family houses continue to dominate the market. In fact, approximately 88 percent of older Millennials who bought a home in 2020 reported purchasing a detached single-family house. This preference for standalone homes transcends age groups and remains a prevailing trend.

Furthermore, the most popular location to purchase a home remains in the suburbs or in a subdivision. This choice reflects the enduring appeal of suburban living and the desire for well-planned communities.

Understanding the Surge in U.S. New Home Prices: A Deep Dive

The landscape of new home prices in the United States has experienced remarkable shifts and fluctuations over the years, with historical home sales data reflecting the complex dynamics of the real estate market. Let's explore the drivers behind the dramatic increase in average sales prices of new homes from 1965 to 2022.

From Plateau to Surge: 2017 to 2022

According to the Statista Research Department report published on June 28, 2023, between 2017 and 2019, new house prices in the United States appeared to plateau, showing relatively stable trends. However, the real estate market underwent a dramatic transformation in 2021 and 2022. The average sales price of a new home stood at 391,900 U.S. dollars in 2020 soared to 540,000 U.S. dollars by 2022.

The question that naturally arises is: What fueled this unprecedented surge in house prices?

The Role of Borrowing Costs

One of the major driving forces behind the dramatic increase in house prices was the historically low cost of borrowing. In 2020 and 2021, mortgage rates plummeted to historic lows. Homebuyers were presented with the opportunity to secure loans at 15-year mortgage rates of less than 2.5 percent. This extraordinary affordability attracted a surge in demand for new homes, driving up prices as buyers rushed to capitalize on favorable borrowing conditions.

The increased demand reached its zenith in 2021 when the number of housing transactions peaked at nearly seven million, signaling the fervor in the market and the impact of accessible mortgage rates.

The Influence of the Pandemic

As the world grappled with the coronavirus (COVID-19) pandemic, it had a complex influence on Americans' homeownership plans. Surprisingly, the pandemic positively influenced the homeownership aspirations of many Americans in 2020. According to a survey conducted among U.S. adults, 28 percent of Millennials expressed increased interest in buying a home due to the pandemic, compared to 13 percent who were less interested.

This shift in sentiment highlighted the changing priorities and the role of housing as a safe haven during uncertain times.

Historical Data of U.S. Housing Units for Sale: 1975 to 2022

The availability of housing units for sale in the United States has followed a remarkable trend over the past four decades. This section delves into the data and insights regarding the number of housing units available for sale from 1975 to 2022, shedding light on the prolonged decline in housing inventory.

Decades of Data: A Prolonged Decline

Since its peak in 2010, the number of housing units available for sale in the United States has been on a steady and persistent decline. This uninterrupted decrease in housing inventory continued for 12 consecutive years, reflecting a significant shift in the real estate market, according to the report by Statista Research Department, Apr 17, 2023.

The question that arises is: What contributed to this prolonged decline?

Factors Behind the Decline

The decline in available housing units for sale can be attributed to various factors, including changing demographics, economic conditions, and evolving homeowner preferences. The aftermath of the 2008 financial crisis led to a surge in foreclosures, increasing the housing supply temporarily. However, in the subsequent years, a combination of factors such as population growth, increased demand, and limited new construction contributed to the decline in available units.

This phenomenon has had implications for both buyers and sellers in the real estate market. A shrinking housing inventory can lead to increased competition among buyers, driving up prices and making it challenging for potential homeowners to find suitable properties.

The Situation in 2022

In 2022, the data revealed that there were approximately 713,000 vacant housing units for sale in the United States. This number represented the culmination of the prolonged decline in housing inventory, with potential buyers facing a more competitive and constrained market than in previous years.

The challenge for both buyers and sellers in this environment is to navigate the evolving landscape of real estate, adapt to changing market conditions, and make informed decisions.

Historical Homeownership Rate in the U.S. 1990-2022

The concept of homeownership has long been intertwined with the American Dream. The journey of homeownership in the United States, from the highs of 2004 to the lows of the recession, and the subsequent resurgence, paints a dynamic picture of aspiration and resilience in the housing market. Let us delve into the data and trends surrounding the homeownership rate in the U.S. from 1990 to 2022.

The Rise and Fall

In 2022, the homeownership rate in the United States experienced a noteworthy uptick, reaching the highest figure since 2011. Approximately 65.9 percent of households were occupied by owners, reflecting a renewed interest in homeownership as published by Statista Research Department, Aug 30, 2023.

However, the journey to this resurgence was not without its challenges. The homeownership rate had its peak in 2004 before the onslaught of the 2007-2009 recession, which decimated the housing market. In the wake of the recession, the rate continued to fall until 2016, marking a significant decline.

But what factors influenced this rollercoaster ride?

Homeownership Since the Recession

The period leading up to the recession and its aftermath saw a decline in the homeownership rate. However, interestingly, the proportion of Americans who still perceived homeownership as part of their personal American Dream remained relatively stable. This suggests that the financial hardships brought on by the recession were key drivers of the decline in homeownership, rather than a fundamental shift in the importance of homeownership itself.

This resilience in the belief in homeownership underscores its enduring significance in the hearts and minds of Americans, even in the face of economic challenges.

The Future of Homeownership

Looking ahead, homeownership trends continue to evolve across different generations. Homeownership among Americans over 65 years old is on the decline, while a significant number of Millennials plan to buy a home in the near future. This suggests that homeownership will remain a vital component of the American Dream in the years to come.

As Millennials are forecasted to head most households over the next two decades, the importance of homeownership is expected to persist. The aspiration to own a piece of the American Dream remains a driving force in the housing market's resilience and adaptability.

Home Sales Trends in the Past

The history of home sales in the United States is a fascinating journey through the economic and social development of the nation. From the early colonial period to the present day, the real estate market has experienced significant changes, influenced by various factors. In this article, we will explore the historical home sales in the U.S. and the key milestones that have shaped the industry.

Colonial Beginnings

Home sales in the United States can trace their roots back to the colonial era when property ownership was primarily limited to the elite and land grants from European monarchs. The concept of residential real estate as we know it today began to emerge in the late 18th century as the new nation expanded westward.

The Land Act of 1796

The Land Act of 1796 marked a significant turning point in American real estate history. It made it possible for individuals to purchase federal land at an affordable price, leading to a boom in land sales and the spread of settlements across the country.

19th Century: The Rise of Urbanization

The 19th century witnessed the rapid growth of cities and the emergence of a more organized real estate market. This era saw the development of the first real estate agencies and the establishment of property deeds and titles.

The Homestead Act of 1862

The Homestead Act of 1862 was a historic piece of legislation that granted 160 acres of public land to settlers who agreed to improve the land by building a dwelling and cultivating crops. This act played a pivotal role in encouraging westward expansion and home ownership.

The Roaring Twenties and the Great Depression

The 1920s were marked by a booming real estate market, with Americans increasingly investing in homes and urban properties. However, this era was followed by the devastating Great Depression, which led to a sharp decline in home sales and property values.

The Federal Housing Administration (FHA)

The establishment of the Federal Housing Administration (FHA) in 1934 was a critical step in revitalizing the real estate market. It introduced mortgage insurance and standardized lending practices, making it easier for Americans to obtain home loans.

Post-World War II and Suburbanization

After World War II, the United States experienced a housing boom driven by returning veterans and a growing middle class. The concept of suburban living became increasingly popular, leading to the construction of mass-produced homes and the expansion of suburbs.

The Housing and Urban Development (HUD)

The creation of the Housing and Urban Development (HUD) department in 1965 further transformed the real estate landscape. It aimed to provide affordable housing options and combat discrimination in housing practices.

The 21st Century and Modern Trends

In the 21st century, technological advancements, changing demographics, and economic fluctuations have continued to shape the U.S. real estate market. The housing bubble of the mid-2000s and the subsequent market crash highlighted the importance of responsible lending and regulation.

The Impact of Online Real Estate Platforms

The rise of online real estate platforms, such as Zillow and Redfin, has revolutionized the way Americans buy and sell homes. These platforms provide easy access to property listings and market data, empowering consumers and agents alike.

Sources/References: 

  • https://www.statista.com/statistics/226144/us-existing-home-sales/
  • https://www.statista.com/statistics/240267/number-of-housing-units-in-the-united-states/
  • https://www.statista.com/statistics/184902/homeownership-rate-in-the-us-since-2003/
  • https://www.statista.com/statistics/219963/number-of-us-house-sales/
  • https://ycharts.com/indicators/us_existing_home_sales

Pending Home Sales Rose 0.9% in July 2023: What Lies Ahead?

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Pending Home Sales Report

The Pending Home Sales Index is a leading indicator of housing activity. It measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. When a seller accepts a sales contract on a property, it is recorded into a Multiple Listing Service (MLS) as a “pending home sale.” Most pending home sales become home sale transactions, typically one to two months later.

The Pending Home Sales Index Explained

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales.

Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues. According to the National Association of REALTORS®, the index is based on a sample that covers about 40% of multiple listing service data each month.

In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. An index of 100 equals the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

ALSO READ: United States Existing Home Sales Trends

Pending Home Sales Elevated 0.9% in July, Marking the Second Consecutive Monthly Increase

Key Highlights

  • Pending home sales improved in July, up 0.9% from June.
  • Month over month, contract signings increased in the South and West but decreased in the Northeast and Midwest.
  • Pending home sales fell in all four U.S. regions compared to one year ago.

Pending home sales increased 0.9% in July – rising for the second consecutive month – according to the National Association of REALTORS®. The Northeast and Midwest posted monthly losses, while sales in the South and West grew. All four U.S. regions saw year-over-year declines in transactions. The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – rose 0.9% to 77.6 in July. Year over year, pending transactions fell by 14.0%. An index of 100 equals the level of contract activity in 2001.

The Market Analysis

The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home-buying offers,” said NAR Chief Economist Lawrence Yun. “Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”

Pending Home Sales Regional Breakdown

The Northeast PHSI shrank 5.8% from last month to 63.2, a decrease of 20.2% from July 2022. The Midwest index fell 0.4% to 77.5 in July, down 16.0% from one year ago. The South PHSI lifted 2.0% to 95.3% in July, declining 10.9% from the prior year. The West index improved 6.2% in July to 61.3, dropping 12.8% from July 2022.

“Interestingly, the West region experienced a meaningful price decline in the past year and buyers are quickly returning as a result,” Yun added.

Implications for Existing Home Sales

Pending home sales often serve as a leading indicator for existing home sales, typically by one to two months. This rise in signed contracts aligns with the trend observed in new home sales during July. However, Danielle Hale, the chief economist for Realtor.com, noted that pending home sales are still lagging behind levels seen in the previous year. Existing home sales have only shown modest growth, which is partially attributed to persistently low housing inventory.

The Inventory Challenge

The shortage of available housing inventory remains a significant barrier to increased home sales across the nation. Many homeowners benefiting from historically low mortgage rates are hesitant to sell their homes and purchase new ones at higher rates. This dynamic has created an opportunity for new construction homes to supplement the limited inventory.

Challenges Ahead

While the recent data highlights the resilience of the real estate market, challenges such as limited housing options and affordability concerns are likely to continue impacting home sales in the coming months. The modest bounceback in existing home sales suggests that the market's recovery is still ongoing.

In summary, the July pending home sales data indicates a 0.9% increase in contract signings, marking the second consecutive monthly rise. While the Northeast and Midwest faced losses, the South and West regions experienced growth. The real estate market continues to show resilience despite challenges posed by rising mortgage rates and limited inventory. The National Association of REALTORS® remains committed to providing valuable insights and indicators for the housing sector.

ALSO READ: Will the Housing Market Crash Again?

Pending Home Sales
Source: N.A.R.

Pending Home Sales Trends (Previous Months)

The table shows data from regarding pending home sales in four regions of the United States – Northeast, Midwest, South, and West. The data reveals interesting trends in pending home sales across the regions. The National Association of Realtors (NAR) publishes monthly data on pending home sales, which is seasonally adjusted and presented in the form of a seasonally adjusted annual rate (SAAR) in thousands.

June 2023 Figures

The data for June 2023 provides a snapshot of pending home sales in the various regions. In the Northeast, pending home sales stood at 67.1. Meanwhile, the Midwest saw a higher figure of 77.6, and the South recorded even stronger numbers at 93.3. The West region lagged behind with pending home sales at 57.7. In total, the overall pending home sales index rested at 76.8.

The month-over-month changes offer insights into the short-term shifts in pending home sales. The Northeast experienced a modest increase of 0.60%. On the other hand, the Midwest region saw a more substantial rise of 4.30%. However, both the South and West regions faced declines, with -1.17% and -1.20% respectively. Across all regions, the total change in pending home sales was 0.39%.

Comparing the pending home sales data from June 2023 with the same period of the previous year unveils the broader trend. The Northeast and Midwest both exhibited similar year-over-year drops, with -17.06% and -17.18% respectively. The South region experienced a somewhat milder decline of -13.85%. The West, while still affected, displayed a year-over-year change of -16.01%. When combining data from all regions, the total year-over-year change in pending home sales was -15.60%.

Here is the tabular data of pending home sales from June 2022 to June 2023. The units displayed are in thousands and are the seasonally adjusted annual rate.

Source:

  • https://www.nar.realtor/research-and-statistics/housing-statistics/pending-home-sales
  • https://www.nar.realtor/newsroom/pending-home-sales-elevated-0-9-in-july-marking-second-consecutive-monthly-increase

U.S. Housing Market Intelligence Report (April 2010)

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Categories are graded from A thru F:

Economic Growth:  D+
Spending remains high and income improved, but the unemployment level remains very high. Overall economic growth improved slightly this month, and the results for our economic growth metrics were generally positive. The revised fourth quarter GDP growth rate increased to 5.6%. The pace of job losses eased this month, and the number of mass layoff events is plummeting, but employment has still declined 1.7% year over year.

The unemployment rate was flat this month at 9.7%, but the broader measure of unemployment, the U-6, increased to 16.9%. The length of unemployment in the labor force increased to 31.2 weeks this month, reaching a record high level since the BLS began tracking the statistic in 1948. Personal income improved and has returned to positive year-over-year growth for the second time since December 2008, increasing by 2.0%. The CPI (all items) increased to 2.3% from one year ago, while the Core CPI (minus food and energy) dropped to 1.1%.

Leading Indicators:  C+

Overall leading indicators held relatively steady this month, but several individual metrics actually improved. The Leading Economic Index has increased for the past eleven consecutive months. The ECRI Leading Index – an indicator of future U.S. growth – increased 13.9% year-over-year, and has experienced positive year-over-year growth for the past 10 months. Stocks improved once again in March, and all four major indices have now experienced large positive year-over-year growth, ranging from +43% to +57%.

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