Home Sales Continue Slide in 2023 as Headwinds Persist

Existing home sales in the U.S. plunged in 2023, notching their largest annual decline in total transaction volume since 1995, according to the National Association of Realtors (NAR). After a brief uptick in November, sales retreated again in December, falling 1% to 3.78 million units—the slowest pace since 2010 amid the Great Recession's fallout.

For the full year, sales dropped 33% to 4.09 million compared to 2020's robust conditions during the pandemic homebuying spree. Though expected after recent overheated growth, the severe reversal reflects shrinking affordability and hesitant buyers and sellers.

Mortgage Rates Climb Out of Reach for Many Households

Much of the ongoing slide relates to higher interest rates from Federal Reserve tightening to control inflation—mortgage payments became too steep for scores of aspirant buyers even though they desired to own versus rent. Sellers have slowly adjusted asking prices but largely held firm so far, hoping to still capitalize on lingering pandemic price gains.

This dynamic slowed sales to a trickle for most of 2023. However, December saw an uptick in Western sales and a slight median price dip from November, perhaps tentative signs of price discovery between buyers and sellers.

Cautious Optimism for 2024 Depending on Key Factors

Housing inventory continues swelling as competition thins. While sellers are still reluctant to make deep price cuts, they may become more motivated as market conditions evolve. Though higher rates could hamper demand further, easing inflation could also stabilize rates.

The housing market has proven cyclical historically. Though the downturn has been difficult, the future could yield a more balanced marketplace if buyers and sellers adapt to changing dynamics and moderate their expectations.

New Jersey's housing market mirrored the national downturn, with existing home sales declining in 2023. According to data from the National Association of Realtors (NAR), sales in the state fell by -20.00% from 123,456 to 98,765. The New Jersey Association of Realtors (NJAR) reported a similar trend, with sales dropping by -16.98%. This decline reflects the broader impact of rising interest rates and high home prices on the housing market.