Home sales fell to nearly 30-year low as median home price hit record high in 2023

Existing home sales fell to their lowest point in 28 years in 2023, while the median price of a home reached a record high, according to a new report from the National Association of Realtors (NAR).

Sales of previously owned homes dropped to 4.09 million last year, marking the lowest annual level of home sales since 1995, the report found. The median price of an existing home, on the other hand, rose to an all-time high of $389,800.

Home sales fell 1 percent last month alone and fell 6.2 percent compared to December 2022, to a seasonally adjusted annual rate of 3.78 million, while the median home price rose 4.4 percent year-over-year to $382,600.

Lawrence Yun, NAR’s chief economist, warned in a statement Friday that the recent rapid rise in home prices is “unsustainable.” 

“If price increases continue at the current pace, the country could accelerate into haves and have-nots,” he said. “Creating a path towards homeownership for today’s renters is essential. It requires economic and income growth and, most importantly, a steady buildup of home construction.”

However, Yun also suggested that December’s home sales “look to be the bottom before inevitably turning higher in the new year,” as mortgage rates come down and more inventory is expected to appear in the coming months.

The 30-year fixed mortgage rate averaged 6.6 percent this week, down from a peak of nearly 8 percent in late October, according to Freddie Mac. 

Mortgage rates climbed over the past two years, as the Federal Reserve repeatedly raised interest rates in an effort to tame sky-high inflation. However, after holding rates steady for its last three consecutive meeting, the central bank appears to be nearing an end to its rate hike campaign.

Most Fed officials also projected in December that the central bank would cut interest rates at least twice in 2024, with the largest group expecting three rate cuts this year.