There is no doubt that the housing market has cooled off some over the past year. In fact, existing home sales have reached their lowest point in 30 years. According to the National Association of Realtors® (NAR), existing home sales fell 18.7% in 2023 compared to 2022. This is the biggest annual decline since 2007, the start of the housing crisis.
Factors impacting the drop in existing home sales
There are a few factors that are contributing to the decline in home sales. First, mortgage rates have risen sharply over this same time frame. The average 30-year fixed-rate mortgage rate even peaked over 7%, which was more than double what it was a year ago. This has made it more expensive for many buyers to qualify for a mortgage.
Second, home prices have continued to rise, even as sales have slowed. The median sales price of an existing home reached a record high of $389,800 in 2023. This is up 4.4% from 2022. The high prices are making it difficult for some buyers to afford a home, especially with rising mortgage rates.
Third, there is a shortage of homes on the market. The inventory of existing homes for sale has been declining for several years. This is due to a number of factors, including the fact that many homeowners are reluctant to sell their homes because they are locked in to low mortgage rates.
The decline in home sales is having a ripple effect on the economy. It is leading to job losses in the construction and real estate industries. It is also slowing down economic growth.
What does this mean for buyers and sellers?
For buyers, the current market may be a good time to buy a home, as prices are starting to come down. However, it is important to be prepared for higher mortgage rates. Buyers should also make sure that they have a good credit score and a down payment saved up.
For sellers, the market is becoming more competitive. Sellers may need to price their homes competitively and be patient in order to find a buyer. It is also important to work with a qualified real estate agent who can help you navigate the market.
Overall, it will be interesting to see what 2024 brings for the housing market. With mortgage rates recently hitting their lowest point since May 2023, we could see buyer activity pick up again during this year. With this said, it is important for prospective home sellers to be ready to potentially take advantage of increased buyer activity in the coming months.
Are you looking to buy or sell a home in the South Florida area? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your mobile device.