The U.S. housing market is slumping.
Home sales have dropped this year, as high prices, high borrowing costs and a low supply of available homes have combined to send potential buyers to the sidelines.
Here are five charts that show the state of the housing market.
Falling home sales
The annual rate of home sales in October was down almost 15% compared to the same period in 2022, according to data from the National Association of Realtors. October’s sales rate, a measure of how many homes would sell in a given year at the month’s pace, was 3.79 million: the eighth consecutive month of declining sales, almost half of early 2021’s levels and the lowest rate since August 2010.
High borrowing costs, higher home prices
One of the main reasons the real estate market has slowed down is the high prices homes are going for. Mortgages are also far more expensive than they were just two years ago.
Home prices soared in the pandemic era. Data from NAR shows the median home price in 2019 just 69 percent of what it is today. It’s been more than a decade since yearly home prices recorded a decline. This comes as inflation has cut into the purchasing power of most households.
Prices are higher across the country, but in the past year they rose the most in the Northeast. That same region, which stretches from Pennsylvania to Maine, is also where sales have fallen the farthest, down almost 17% in October.
The Federal Reserve has moved aggressively to combat inflation, raising interest rates more than 11 times since March 2022. Higher interest rates make it more expensive to borrow money, and that cost has reached the buyers who would purchase using mortgages. Data from Freddie Mac shows that interest rates on both 15-year and 30-year fixed-rate mortgages are at their highest levels since the early 2000s, though they have begun to recede in recent weeks.
Fewer homes on the market
Low inventory is another side of the equation, and right now there are fewer homes available for purchase. Data from Realtor.com shows that active listings are about half of where they were in 2019. And though inventory increased slightly in October, the number of homes left unsold also increased.
CORRECTION (Nov. 22, 2023, 8:30 p.m. ET): An earlier version of this article misstated the percent difference between median home prices in 2019 and 2023. Homes prices in 2019 were 69% of 2023 levels, not half.