In 2023, the US housing market entered an unusual period of slowdown. This break from the norm was driven by high interest rates and homeowners choosing not to sell, resulting in fewer homes on the market. This shift is important for understanding the future of the housing market.

Rising mortgage rates and their impact

Throughout 2023, mortgage rates rose significantly, putting pressure on the housing market. This made it difficult for many potential buyers to afford homes in their desired locations. Notably, 90% of homeowners with mortgages had rates below 6%, but this still resulted in fewer homes being listed compared to 2022.

House prices: Remaining strong amid challenges

Contrary to some expectations, the median house price actually rose to $428,000, an increase of 2.1%. Despite the slowdown from the rapid growth during the pandemic, the market remained resilient. The limited number of homes available and steady demand kept prices competitive.

The buyer’s challenge: high prices and limited choice

First-time homebuyers in 2023 faced the twin challenges of high prices and mortgage rates. The limited number of homes available increased competition. Buyers had to be mindful of their budgets and make strategic decisions, often prioritising strict budgeting and saving for a substantial deposit.

Looking back and looking forward

In 2023, the US housing market is characterised by slow growth and fewer options. Despite obstacles such as high interest rates and home prices, the market has maintained its activity. For both buyers and sellers, understanding these trends is critical to navigating the evolving housing market and preparing for future conditions.