18 housing tendencies that outlined the yr, together with file mortgage charges, depleted stock, and dwindling dwelling gross sales
2023 was a tough yr for the housing market. It began with a continuation of adverse tendencies from the tip of 2022 and was the least reasonably priced yr for dwelling shopping for on file.
Seasonal tendencies buckled. The spring homebuying season by no means occurred, housing stock remained traditionally low all year long, and gross sales plummeted.
The market was so tough that greater than half of latest homebuyers believed shopping for a house was extra irritating than courting, and almost 40% of homebuyers underneath 30 obtained cash from their household to afford a down fee.
So what occurred? Briefly: Document mortgage charges, excessive inflation, and persistently excessive housing and rental costs. However there was much more to it as effectively.
Beneath are tendencies, knowledge factors, and visuals that outlined the 2023 housing market.
All knowledge is aggregated from January via November 2023, and doesn’t embrace December except in any other case acknowledged. December knowledge is thru the fifteenth of the month. All knowledge is from Redfin, FRED, NAR, and/or public data. For questions on metrics, learn our metrics definitions web page.
1. Residence costs rose to near-record highs
The U.S. median sale value peaked at $425,000 in June, just under final yr’s file excessive of $433,000. Nonetheless, when averaging over the complete yr, 2023’s common median sale value was greater than any earlier yr in historical past, rising from $407,000 in 2022 to $409,000.
“The bizarre mixture of low provide and low demand brought about dwelling costs to stay elevated all year long, which was dangerous information for just about everybody,” laments Daryl Fairweather, Redfin Senior Chief Economist. “The market was extraordinary; it felt scorching, despite the fact that only a few houses modified palms.”
2. San Francisco was the costliest metro space for homebuyers in 2023
Nonetheless the costliest metropolitan space (metro) within the nation, the median sale value of a house in San Francisco was $1,446,000 in 2023, down 4.2% yr over yr.
- The highest six costliest metros have been all in California.
- Milwaukee noticed the most important year-over-year value improve within the nation, rising 8.8%.
- Three Florida metros have been among the many ten metros with the most important year-over-year will increase: Miami (8.4%), West Palm Seaside (7.6%), and Fort Lauderdale (7.2%).
The highest ten costliest metros to purchase a house in 2023
| Metro | Median sale value | 12 months-over-year change |
| San Francisco, CA | $1,446,000 | -3.4% |
| San Jose, CA | $1,431,250 | +0.5% |
| Anaheim, CA | $1,029,000 | +3.9% |
| Oakland, CA | $903,000 | -4.8% |
| Los Angeles, CA | $846,000 | -0.7% |
| San Diego, CA | $845,000 | +3.5% |
| Seattle, WA | $766,000 | -1.3% |
| New York, NY | $684,500 | +0.4% |
| Boston, MA | $677,500 | +4.4% |
| Nassau County, NY | $617,400 | +1.8% |
Knowledge contains the yearly median sale costs out of all houses bought in every of the 50 largest metropolitan areas. Knowledge doesn’t have in mind native median incomes and residential affordability.
3. Detroit was the least costly metro space for homebuyers in 2023
The median sale value for a house in Detroit was $173,450 in 2023, down 2.7% yr over yr. Though costs fell in 2023, houses in Detroit are dearer than they have been earlier than the pandemic, as an inflow of individuals looking for affordability have pushed up costs.
“Residence costs remained pretty secure in Detroit and even rose in some areas,” says Anne Loehr, a Detroit Redfin agent. “Nonetheless, throughout the town, just lately up to date houses went for probably the most cash.”
- Eight of probably the most reasonably priced U.S. metros noticed costs rise as homebuyers pounced on inexpensive housing.
- 9 of the ten least costly metros have been all situated within the Rust Belt, a geographic area close to the Nice Lakes and Appalachians.
- Three pandemic homebuying boomtowns noticed the most important year-over-year value drops: Austin (-9.7%), Oakland (-4.8%), and Phoenix (-3.9%).
The highest ten least costly metros to purchase a house in 2023
| Metro | Median sale value | 12 months-over-year change |
| Detroit, MI | $173,450 | -2.7% |
| Cleveland, OH | $204,800 | +2.3% |
| Pittsburgh, PA | $218,400 | +1.1% |
| St. Louis, MO | $246,700 | +3.6% |
| Philadelphia, PA | $264,150 | -1.9% |
| Cincinnati, OH | $270,400 | +7.5% |
| Warren, MI | $285,600 | +4.1% |
| Indianapolis, IN | $290,350 | +5.2% |
| Milwaukee, WI | $299,250 | +8.8% |
| Kansas Metropolis, MO | $310,200 | +3.9% |
Knowledge contains the yearly median sale costs out of all houses bought in every of the 50 largest metropolitan areas. Knowledge doesn’t have in mind native median incomes and residential affordability.
4. Lease costs remained traditionally excessive however stopped in need of new file
The median U.S. lease value hit $2,050 in August 2023, matching the file value of $2,050 set in August 2022. 12 months-over-year value modifications have been flat till November once they dropped considerably, as a rise in stock and vacancies compelled landlords to carry rents regular or drop them. Different contributors to the quieter rental market: Sturdy new development within the condo trade, and fewer new households forming (two or extra folks residing collectively).
“November supplied probably the most aid for renters,” says Maggie McCombs, managing editor of Rent., a Redfin firm. “Costs dropped by 2.1%, marking the first time in additional than three and half years that costs fell by greater than a single p.c. We anticipate decreases to proceed into 2024.”
This was in stark distinction to the previous two years, which went from sudden progress through the pandemic to a free-fall within the second half of 2022.
“One of many largest modifications in comparison with 2022 was the slowdown within the rental market,” provides Fairweather. “Final yr, lease costs skyrocketed within the first half of the yr on account of low provide and excessive demand. Nonetheless, in 2023, provide started to catch up, inflicting many landlords to maintain costs flat amid greater emptiness charges.”
Though progress slowed, the common lease value for all months via November in 2023 rose $10 to $1,992, the best in historical past. This solely worsened the affordability disaster throughout the nation, particularly for decrease revenue households. Lease progress has outpaced wages for many years, however the most recent data states that the common renter now spends 30% of their revenue or extra on lease.
The U.S. at present has a shortage of 7.3 million reasonably priced housing items for individuals who want them, and no state has an enough provide.
Knowledge contains the 2023 common aggregated median lease costs for every of the 50 largest core-based statistical areas (CBSAs) in comparison with 2022 knowledge from the identical interval.
5. Inflation remained stubbornly excessive earlier than lastly falling
The costs of products and providers rose 6.6% yr over yr in February, just under 2022’s excessive and the second-highest inflation degree since August 1982. Inflation then fell steadily all year long, albeit nonetheless above wholesome ranges.
As rates of interest hovered round 0.5% for the whole lot of the pandemic, inflation took off on account of provide crunches and elevated client demand. The Fed raised its benchmark charge in 2022 to fight inflation and funky the economic system – that began working this year, however greater rates of interest led to greater mortgage charges, which slowed the housing market. Curiosity remains high as we finish 2023, however economists anticipate them to start out coming down subsequent yr.
- Because the Fed started elevating the goal charges in March 2022, they’ve elevated it 11 instances to the present vary of 5.25-5.5%.
- Inflation remained highest in pandemic boomtowns due partly to the sudden soar in home costs, which is a key contributor to inflation.
Knowledge courtesy of FRED. Knowledge measures CPI (much less meals and vitality) via November 2023.
6. Mortgage charges ballooned past 8% for the primary time in over 20 years
“Mortgage charges have been the secret this yr as file inflation helped push each day common 30-year fastened charges previous 8% for the primary time since 2000, pricing many patrons and sellers out of the market,” says Fairweather. “Residence patrons didn’t wish to pay twice as a lot for a house than they might have three to 4 years in the past, and residential sellers didn’t wish to hand over their pre-pandemic charges.”
Increased mortgage charges impacted affordability throughout the market, straining already sapped budgets. In July, the common month-to-month mortgage fee reached $2,637 and grew greater than twice as quick as wages (12.6% in comparison with 5.2%). Each have been file highs. Affordability (or lack thereof) additionally instantly impacts housing inequality, which is wider now than it was within the Nineteen Sixties.
Importantly, mortgage charges fell noticeably earlier than the tip of the yr on account of inflation easing up, the Fed holding charges regular, and the labor market rising slower than anticipated. Whereas rates of interest aren’t predicted to fall till halfway via subsequent yr (three rate drops are predicted in 2024), mortgage charges might proceed to fall sooner.
“Trying forward, whether or not rates of interest will fall depends upon two issues: the energy and resiliency of the economic system, and client habits,” notes Matt Birdseye, Government Vice President at Bay Equity, a Redfin firm. “Till unemployment rises and the economic system slows, charges are unlikely to fall.”
- Simply 16% of houses have been reasonably priced for the standard family in 2023, possible the bottom for the foreseeable future.
Graph exhibits aggregated common mortgage charges, not each day charges, which is why the graph doesn’t depict the 8% excessive. Each day charges are extra variable.
7. Homebuyers seeking to relocate favored solar and affordability
A file 26% of homebuyers appeared to maneuver to a special metro space within the three months ending August 2023, up from 24% throughout the identical three months in 2022 and 25% originally of this yr.
“Typically talking, the proportion of patrons seeking to relocate was greater in 2023 than in 2022,” notes Chen Zhao, Redfin Senior Economist. “Regardless of purchaser demand falling total, those that appeared to purchase sought extra reasonably priced places to get extra for his or her cash.”
Surprisingly, the chance of pure disasters didn’t push dwelling costs down in lots of at-risk metros. “We anticipate this to vary within the close to future, although,” continues Zhao.
Lots of the high migration hotspots have been sunny, extra reasonably priced metros which grapple with extreme local weather dangers comparable to warmth, drought, and flooding. This isn’t new; the truth is, from 2021-2022, migration into probably the most flood-prone areas doubled in comparison with the prior two years. This comes as 2023 set a new record for billion-dollar climate disasters.
“It’s human nature to concentrate on present advantages over prices that would rack up in the long term,” admits Daryl Fairweather. “Briefly, the results of local weather change haven’t absolutely sunk in. That is partly as a result of most owners don’t foot the invoice when catastrophe strikes. However as insurers continue to pull out of disaster-prone areas, folks might really feel a larger sense of urgency to mitigate local weather risks – particularly if their dwelling’s worth is prone to falling.”
The highest 5 hottest metros folks appeared to maneuver to in 2023
| Metro | Variety of folks seeking to transfer to the world |
| Las Vegas, NV | 5,565 |
| Miami, FL | 5,240 |
| Sacramento, CA | 5,125 |
| Phoenix, AZ | 4,770 |
| Orlando, FL | 4,595 |
The highest 5 hottest metros folks appeared to depart in 2023
| Metro | Variety of folks seeking to depart the world |
| San Francisco, CA | 28,365 |
| New York, NY | 23,710 |
| Los Angeles, CA | 20,640 |
| Washington, D.C. | 15,590 |
| Louisville, KY | 5,195 |
Knowledge is the p.c of Redfin.com customers looking for houses exterior their metro. Knowledge is the annual median mixture of a number of three-month rolling aggregates. Sustain with the newest migration information right here.
8. Housing stock remained effectively beneath common
There was a mean of 1.015 million houses listed on the market each month in 2023, down 0.1% from final yr. Month-to-month stock peaked at 1.1 million houses, beneath 2022’s 1.26 million and much beneath historical normals.
Cincinnati (-41.9%), Newark (-24.3%), and New Brunswick (-21.9%) noticed the most important stock declines, with Chicago coming in fourth.
Mortgage charges have been the first motive why stock was so sluggish. Practically 1 / 4 of all owners had an rate of interest beneath 3%, and round 90% of householders had charges beneath 6%, main many would-be sellers to remain put to keep away from taking up a better charge.
Stock is calculated in rolling 90-day durations, e.g., January 2023 knowledge is the three-month interval from November 1, 2022, via January 31, 2023. Redfin stock data date again to 2012.
9. New listings dropped to their lowest degree on file
There have been simply 5.4 million new listings in 2023, the bottom degree on file and an enormous 16.4% drop from 2022. Common month-to-month new listings additionally posted sharp declines, falling from 585,000 in 2022 to 520,000 this yr.
New listings are one issue that make up complete housing stock. The dramatic drop in new listings was primarily on account of skyrocketing mortgage charges, retaining patrons and sellers on the sidelines.
12 months over yr, new listings fell each month in 2023 till November, once they started to rise for simply the second time since July 2022. That very same month, in addition they posted their largest improve since 2021 as mortgage charges fell to underneath 7.4%, effectively beneath the excessive of 8%. Listings continued to rise into December.
This yr, new listings have been additionally a significant factor in figuring out native market tendencies. For instance, new listings dropped an enormous 24% throughout New York State in 2023, inflicting a ripple impact. “The drop in new listings created a surge in competitors amongst patrons searching for reasonably priced houses,” says Kimberly Hogue, a Rochester Redfin agent. “Sellers have been in a position to profit massively in lots of Upstate markets as patrons competed over the few houses left, resulting in a spike in costs.”
Joey Keeler, a Redfin Premier agent in Seattle, agrees, however says that favorability depends upon the property. “Typically, our market favors sellers, but it surely depends upon the itemizing,” he says. “Some well-priced houses can see a number of bidding wars, whereas others might sit available on the market for weeks.”
- New listings posted year-over-year positive factors to shut out the yr, offering hope for 2024.
New listings are calculated in rolling 90-day durations, e.g., January 2023 knowledge is the three-month interval from November 1, 2022, via January 31, 2023. Redfin listings data date again to 2012.
10. Months of provide reached 3.4 months, its highest degree since 2019
Whereas stock measures the variety of houses at present out there on the market, months of provide measures the period of time it might take these houses to promote. Six months of housing provide is taken into account a wholesome benchmark, with fewer than six indicating a vendor’s market and greater than six indicating a purchaser’s market.
The common inventory of housing provide throughout each month in 2023 was 2.4 months, up from 2.1 months in 2022.
Though months of provide rose in 2023, it was nonetheless a really tight market; via the primary six months of the yr, simply 1.4% (14 out of 1000) of the nation’s houses modified palms, the bottom share in no less than a decade. The pandemic homebuying increase depleted provide, which has solely barely began to recuperate.
“Months of provide gained some floor this yr in comparison with final, reaching above 3 months in January, however nonetheless remained far beneath a balanced market,” provides Fairweather. “Nonetheless, native market tendencies decided whether or not or not patrons or sellers had a bonus.”
- Months of provide grew at its quickest charge yr over yr in historical past in January earlier than falling till April.
- Though months of provide started growing to shut out the yr, it nonetheless remained beneath a balanced market.
Provide is calculated in rolling 90-day durations, e.g., January 2023 knowledge is the three-month interval from November 1, 2022, via January 31, 2023. Redfin provide data date again to 2012.
11. New development fell as builders have been left caught with inflated stock
There have been 1.41 million privately-owned new houses constructed within the U.S. via November 2023, down from 1.55 million in 2022.
Many dwelling builders who snatched up land through the pandemic to capitalize on the provision crunch have been left caught with houses they couldn’t promote this yr. It is a stark distinction from 2022, when new development blossomed following the pandemic provide crunch.
“In case you’re a purchaser, think about new development houses,” advises Kim Stearns, a Northern Idaho Redfin agent. “Due to a list buildup, many builders have one to 4 houses they might love to shut on and can usually provide incentives.”
New development slowed earlier than rising later within the yr, as inflation cooled and extra homebuyers entered the market. Experts predict new development will proceed rising into subsequent yr.
- Over 73% of recent builds have been single-family houses, up 8% yr over yr.
12. Residence gross sales fell greater than 18%, hitting file lows
Simply 4.59 million U.S. houses bought via November, an unimaginable 18.3% drop from the 5.62 million bought in 2022 throughout the identical interval.
12 months-over-year dwelling gross sales have been adverse each month in 2023. Nonetheless, the declines shrunk from a low of -37.5% in January to simply -4.8% in November, displaying a promising upward pattern main into 2024.
Sadly, current dwelling gross sales, a measure of what number of houses which have bought no less than as soon as are anticipated to promote in a yr, have fared a lot worse. Typically, between 4 and 7 million current houses promote per yr, with the historic common sitting at just over 5 million. In 2023, consultants predict simply 3.82 million existing home sales, a 7.3% drop from 2022 and the lowest annualized amount since August 2010.
- Simply 278,000 houses bought in January, the bottom quantity since 2012.
- In Might, the variety of lively listings dropped to 1.4 million, its lowest degree on file. Fewer listings helps enhance bidding wars and additional deter patrons, impacting gross sales.
- Whereas pending gross sales rose in November, closed gross sales fell via at a file charge to shut out the yr.
13. Median days on market soared past one month because the market cooled
In 2023, houses spent a mean of 37 days available on the market, a full ten days greater than 2022.
Provide began dropping dramatically through the pandemic on account of provide chain points, rising demand, and a persistent lack of homebuilding. Nonetheless, provide started inching upwards half method via 2022, as mortgage charges rose and fewer folks entered the market.
In 2023, slowly rising provide paired with excessive dwelling costs and mortgage charges led to a rise in time on market in most metros. Nonetheless, extra reasonably priced areas noticed the alternative impact; halfway via 2023, homes in Buffalo and Rochester bought over six instances sooner than houses in Austin.
“Stock for Austin is at present sitting at an 8-year excessive, which corresponds with a rise in time on market,” observes Chris Daniels, a Redfin Gross sales Supervisor in Austin. “Stock has climbed regularly all through 2023, however many indicators are pointing in the direction of this being the height on account of decrease mortgage charges luring folks again to the market.”
- June and July have been the busiest months of the yr, with houses spending 29 days available on the market.
- By far, the slowest month was January, with houses spending a mean of 52 days available on the market.
14. 15% of lively listings skilled value drops
15.3% of listings skilled value drops in 2023, up from 13.9% in 2022.
As affordability worsened and fewer patrons entered the market, extra sellers have been compelled to decrease costs. In some markets, sellers additionally needed to provide extra concessions on account of very restricted demand. In reality, by November, greater than one-third of all dwelling sellers gave concessions – down from the file 45.6% in February however up from 27.6% two years prior.
“A good way patrons can decrease the price of a house is thru vendor concessions and buydowns,” advises Mike S. Rafii, a Regional Gross sales Supervisor at Bay Fairness. “A standard method to do that is by negotiating vendor concessions to incorporate cash towards the customer’s closing prices. The customer can then use this cash to purchase down their rate of interest – both completely (for the complete mortgage time period), or briefly (for as much as 3 years).”
In lots of markets, sellers must do every thing they will to safe a purchaser. “To make a property extra interesting, sellers must have their houses in pristine situation to draw patrons,” suggests the Redfin Premier brokers in Las Vegas. “In Las Vegas, sellers needed to do every thing underneath the solar, from paying closing prices to providing repairs, to get a luxurious purchaser this yr.”
- On common, value drops remained extra widespread than any yr on file, as restricted affordability hampered patrons’ budgets.
- Of all sellers who dropped their unique itemizing costs in 2023, the common vendor dropped costs by 4.5%.
The highest 5 metros with the best share of value drops in 2023
Knowledge contains the aggregated common proportion of value drops out of all lively listings in every of the 50 largest metropolitan areas.
15. Practically 33% of houses have been bought with money in 2023
32.7% of houses have been bought with all money in 2023, up from 30.7% final yr and the highest share in a decade. Nonetheless, whereas the share of all-cash purchases continued rising, the variety of money gross sales fell yr over yr alongside all different gross sales metrics.
Prosperous dwelling patrons who can afford to pay money are extra apt to purchase when mortgage charges are excessive. By paying all money, they keep away from rates of interest altogether and safe a greater deal. Whereas these are useful advantages, in addition they exacerbate inequality between individuals who personal houses and individuals who don’t.
Money purchases have been particularly widespread at greater value factors. “The luxurious market skilled a big inflow of money patrons this yr, on account of greater mortgage charges,” notes Jonathan Huffer, a Redfin Premier agent in Palm Seaside.
- In September, 1 in 3 homebuyers have been paying all-cash, the best share since 2014.
- Cheap metros and high migration locations noticed the best share of money purchases.
- Lots of the costliest metros noticed the fewest all-cash purchases, together with Oakland (17.3%), San Jose (19.1%), and Seattle (20.4%).
The highest 5 metros with the best share of all-cash purchases in 2023
Knowledge is from a Redfin evaluation of county data throughout 39 of probably the most populous U.S. metropolitan areas, courting again via 2011.
16. Luxurious dwelling gross sales skilled their largest year-over-year decline on file
In 2023, there have been 549,750 luxurious houses bought, down 23.8% yr over yr.
In January, luxurious dwelling gross sales fell a file 45% to their second-lowest degree ever, persevering with a speedy decline from 2022. 12 months-over-year gross sales remained adverse each month, however slowly rose because the yr went on. A mean of 53,200 luxurious houses bought monthly in 2023, down 10.5% yr over yr.
At the same time as gross sales fell, luxurious home costs continued to develop this yr, topping $1.15 million in September, a brand new file and better than any level in 2022. Nationwide, luxurious dwelling costs grew almost thrice sooner than non-luxury costs however dropped in costly metros as folks migrated to extra reasonably priced areas.
Increased costs additionally meant much less competitors. “Increased costs weeded out many patrons within the luxurious market and dropped competitors nationwide,” notes Sam Chute, a Redfin Premier agent in Miami. “Nonetheless, houses that did promote usually bought shortly.”
Luxurious houses are outlined as the highest 5% of listings by value in a given market. Values are three-month rolling aggregates ending on the date proven, e.g. November 2023 spans September, October, and November 2023. Knowledge doesn’t embrace the three months ending December 31.
17. Bidding wars fell in 2023
51.6% of houses had a bidding struggle in 2023, down from 54% in 2022. Typically, bidding wars have been dropping as mortgage charges have elevated. This has been particularly pronounced in pandemic boomtowns.
In lots of markets, bidding wars have been just about nonexistent. “Attributable to excessive mortgage charges and low competitors, patrons didn’t really feel as a lot stress to compete,” notes Desiree Bourgeois, a Detroit Redfin agent. “Sellers must know that patrons are much less tolerant of an overpriced dwelling.”
- Fort Value (-23%), Austin (-17%), and San Antonio (-15.6%) noticed the most important decreases in bidding wars yr over yr.
The highest 5 metros with the best proportion of bidding wars in 2023
Redfin defines a bidding struggle as when a house faces no less than one competing bid.
18. Traders purchases dropped at a file charge
Investor purchases plummeted by a file 48.6% yr over yr within the first three months of 2023, which adopted a 46.2% fall on the finish of 2022. Each drops exceeded the earlier 45.1% file fall through the 2008 subprime mortgage disaster. (Investor buy data date again to 2000.) Nonetheless, investor market share remained comparatively secure all year long, hovering round 17%, beneath final yr’s 19%.
The drop in purchases continued till the final quarter of 2023 however eased barely as mortgage charges started to stabilize. Investor exercise isn’t anticipated to rebound within the close to future.
These sharp drops got here simply months after the file surge in investor exercise that occurred within the aftermath of the pandemic. In reality, the entire most dramatic falls occurred within the Solar Belt, the place investor exercise jumped probably the most post-pandemic.
Atlanta, one of many high metros for buyers final yr, noticed a 60% lower in investor purchases, the most important fall within the nation – however issues are beginning to lookup. “Following a decline for many of those previous two years, investor exercise has ticked up in Atlanta,” says Angie Lawson, a Redfin agent in Atlanta. “They’re now focusing extra on shopping for land, flipping houses, and buying properties for rental revenue.”
Traders typically purchase houses both to promote or lease and capitalize on low development prices and excessive demand. Nonetheless, when prices are excessive and demand is low, buyers often decelerate purchases. That’s what occurred this yr; excessive mortgage charges, a lackluster rental market, and rising dwelling costs left many buyers with houses they couldn’t promote or lease.
- Multi-family houses continued to be the preferred amongst buyers, with single-family houses coming in second.
- A file 40.5% of all investor purchases have been starter houses (lower than 1,400 sq. toes).
The highest 5 metros with the most important investor market shares in 2023
Knowledge is analyzed on a quarterly foundation and contains all property sorts except in any other case acknowledged. Knowledge is thru September (Q3).
Trying ahead
The 2023 housing market was arduous for a lot of owners and renters, however what does Redfin predict for 2024? Learn our 2024 Housing Market Predictions to be taught extra.
