Original Article Appeared on Probuilder.com
Despite being well into 2024 already, it's now possible—and important—to look back at the previous year as a reminder of those housing market conditions and how they're likely to affect the current year. It really is a tale of two housing markets, between the upheaval of the resale sector to the pleasant if generally unexpected gains in the new-home segment, and as I wrote in "Advice for Home Builders Navigating a Housing Market in Flux" in 2023, a builder's best bet is to plan ahead.
Several factors influence housing market conditions, including existing-home sales and new-home sales, mortgage interest rates (and the policies driving them), and new-home construction activity, among others. Here's a quick recap of what those factors did in 2023 and a glimpse into how 2024 is shaping up by comparison.
A Look at 2023 Existing-Home Sales
At just a little more than 4 million homes sold during 2023, the existing-home market registered its weakest sales pace in 28 years.
Persistently elevated mortgage interest rates, low inventory of for-sale homes, and lack of affordability all contributed to this collapse—a decline of 18.7% (about 5 million sales) from 2022 and 33.2% from the 2021 sales rate of 6.12 million. Annual sales of 5 million is historically the balancing point for existing-home sales for a strong market or a weak market.
December’s existing-home sales pace was 3.78 million, which was down 1% from the November pace and 6.2% off the sales pace registered in December 2022. This monthly seasonal pace for existing-home sales was the slowest recorded since 2010, at the end of the Great Recession.
As 2023 closed, there were approximately 1.0 million existing homes on the market, equating to a 3.1 months of supply—13.6% above the record low inventory of 880,000 or only 2.3 months of supply in 2021, and a 4.1% improvement over the 960,000 homes or 2.7 months of supply in 2022.
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