2023 Real Estate Market Review

2023 was a challenging year for the U.S. housing market. Mortgage rates reached a 2-decade high, housing inventory remained at historic lows, and sales prices continued to climb, making homeownership feel out of reach for many. We understand that housing affordability is a top concern for homebuyers, and there's a good reason for that. Mortgage payments have significantly increased compared to 2022, with some homeowners now spending more than 30% of their income on their monthly payment.

As a result, sales of previously owned homes remained sluggish throughout the year. However, there was a silver lining as the shortage of existing-home inventory helped drive an increase in sales of new residential homes compared to the previous year.

Higher mortgage rates not only impacted buyers but also current homeowners. Many homeowners purchased or refinanced their homes in 2020 or 2021, when rates were significantly lower. While those pandemic-era mortgages have been beneficial for many, they have also deterred some homeowners from moving. Choosing to hold onto their current mortgage rate to avoid a higher rate and a more expensive monthly payment, some potential sellers have put their moving plans on hold. This further limited the number of homes available for sale and drove up home prices in the process.

Let's take a closer look at the numbers: (Tri-county area)

• Pending sales decreased by 8.9 percent, ending 2023 at 17,291.
• Closed sales were down 15.2 percent, with 16,890 sales recorded for the year.

When it comes to listings:

• The number of homes available for sale decreased by 4.1 percent compared to the previous year, with 2,923 active listings by the end of 2023.
• New listings also saw a decrease of 11.0 percent, finishing the year at 21,115.

In terms of showings:

• Total showings were down by 10.2 percent compared to 2022.
• The number of showings before pending remained the same as the previous year, with an average of 9 showings.

For new construction homes:

• The months of supply for new construction homes at the end of 2023 was 2.3 months.

Speaking of prices:

• Home prices saw an increase compared to last year. The overall median sales price went up by 1.5 percent, reaching $404,972 for the year.
• Single-family home prices rose by 1.2 percent, while townhouse-condo home prices increased by 4.8 percent.

Looking ahead, there is some positive news. With inflation improving, the Federal Reserve recently announced that they are likely done raising interest rates for now. In fact, they plan to make at least three cuts to their benchmark rate in 2024. This has resulted in a drop in mortgage rates in recent months, which should help attract more buyers and sellers back into the market. We anticipate this could lead to an uptick in both home sales and housing supply.

However, it's important to note that affordability will still remain a challenge for many homebuyers. Economists predict that U.S. home sales will continue to be lower compared to the period of 2019-2022. When it comes to home prices, opinions are mixed. Some analysts expect prices to hold steady or continue rising in certain areas, while others predict a modest price drop in some markets.

At Flowertown Realty, we understand the complexities of the housing market and the challenges faced by buyers and sellers. We're here to help navigate these waters with you, providing expert guidance and personalized service to ensure you make the best decisions for your unique situation. Let's work together to find your dream home or sell your current property in this ever-changing market. We're dedicated to building a strong community and helping you achieve your homeownership goals.