December home sales slump to close out worst year since 1995
Diana Olick

Sales of previously owned homes fell 1% in December compared with November to 3.78 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. Sales were 6.2% lower than in December 2022, marking the lowest level since August 2010.

Full-year sales for 2023 came in at 4.09 million units, the lowest tally since 1995.

Regionally, on a month-to-month basis, sales were unchanged in the Northeast and fell 4.3% in the Midwest. Sales were down 2.8% in the South but rebounded 7.8% in the West. On a year-over-year basis, sales were lower in all regions.

The count of home closings is based on contracts likely signed in late October and November, when mortgage rates were considerably higher than they are now. The average rate on the 30-year fixed loan rose to about 8% in Octoberbefore falling to the 7% range in November. It is now at 6.89%, according to Mortgage News Daily.

“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” said Lawrence Yun, NAR’s chief economist, in a release. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”

Inventory fell 11.5% from November to December, but it was up 4.2% from December 2022. There were 1 million homes for sale at the end of December, making for a 3.2-month supply at the current sales pace. A six-month supply is considered balanced between buyer and seller.

Tight supply continues to reheat home prices. The median price of a home sold in December was $382,600, an increase of 4.4% from December 2022. That is the sixth consecutive month of year-over-year price gains. The median price for the full year was $389,800, a record high.

Homes stayed on the market longer in December, at an average of 29 days, up from 25 days in November. The share of all-cash sales rose to 29% from 27% in November. Individual investors, who make up a large share of all-cash sales, bought 16% of homes, down from 18% in November.

That pullback in activity from investors may be one bright spot for buyers. Both higher home prices and higher financing costs resulted in fewer investor home purchases for the full year 2023, according to a recent Realtor.com study.

“With rents continuing to ease and more multi-family homes entering the market for rent, investors may continue to tread more cautiously in the housing market,” said Danielle Hale, chief economist at Realtor.com. “This would mean one less source of competition for potential first-time home buyers who are approaching the 2024 market with optimism despite the challenge of trying to buy a home at a below-median price point, one that investors also often target.”

First-time buyers are still struggling, making up just 29% of December sales, down from 31% the year before. Historically they make up 40% of the market.

 

Diana Olick is an Emmy Award-winning journalist, currently serving as CNBC’s senior climate and real estate correspondent. She also contributes her climate and real estate expertise to NBC News NOW, MSNBC, NBC’s “Today” and “NBC Nightly News.” She is a regular guest speaker and does guest segments on NPR and C-SPAN. Her work on CNBC.com won the Gracie Award for “Outstanding Blog” in 2015.

Soon after joining CNBC in 2002, Olick recognized the quick run-up in the housing market, fueled by investor flipping, and consequently launched the network’s real estate beat. She covers both commercial and residential real estate as well as the mortgage market. Olick was at the forefront of reporting on the housing boom, the subprime mortgage collapse, the resulting housing crash and the ongoing recovery. She also launched the real estate page on CNBC.com and is its primary author.

In 2018, Olick envisioned a new series for the network called “Rising Risks,” which examines all aspects of the growing risk to real estate from climate change. The series grew beyond real estate and in 2021, Olick began covering climate full-time across all sectors. That same year, she covered the COP26 United Nations climate summit in Glasgow, Scotland, reporting on government, corporate and private sector investments in the fight against climate change.

In early 2022, Olick launched an additional climate series, Clean Start, which follows venture capital money into climate startups. The series airs weekly and has its own page on CNBC.com/clean-start.

Prior to joining CNBC, Olick spent seven years as a correspondent for CBS News. Olick began her career as a local news reporter at WABI-TV in Bangor, Maine; WZZM-TV in Grand Rapids, Michigan; and KIRO-TV in Seattle. She joined CBS in 1994 as a New York-based correspondent for the “CBS Evening News with Dan Rather” and “The Early Show.” She also contributed pieces to “48 Hours” and “Sunday Morning.“

At CBS, Olick worked in the New York, Dallas and Washington, D.C. bureaus, covering such stories as the World Trade Center conspiracy trial, the crash of TWA Flight 800, the JonBenet Ramsey murder mystery and was the exclusive correspondent for the trial of Oklahoma City bomber Terry Nichols. She also took a temporary assignment in CBS’ Moscow bureau, where she chronicled the brief presidential campaign of Mikhail Gorbachev.

Olick has a B.A. in comparative literature with a minor in soviet studies from Columbia College in New York and a master’s degree in journalism from Northwestern’s Medill School of Journalism.

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