U.S. existing home sales 2005-2023

The number of U.S. home sales in the United States declined in 2022, after surging the year before and reaching the highest value observed since 2006. A total of five million housing transactions were completed in 2022, down from 6.12 million in 2021. In the first five months of 2023, the market continued to cool down and as of May 2023, the annual number of single-family and condo or co-op transactions stood at 4.3 million.

Why have home sales declined?

The housing boom during the coronavirus pandemic has demonstrated that being a homeowner is still an integral part to the American dream. Nevertheless, sentiment declined in the second half of 2022 and Americans across all generations agreed that the time was not right to buy a home. A combination of factors have led to house prices rocketing, making homeownership unaffordable for the average buyer. A survey among owners and renters found that the high home prices and unfavorable economic conditions were the two main barriers to making a home purchase in the third quarter of the year. People who would like to purchase their own home need to save up a deposit, have a good credit score, and a steady and sufficient income to be approved for a mortgage. In 2022, mortgage rates experienced the most aggressive increase in history, making the total cost of homeownership substantially higher. Only 15 percent of U.S. renters could afford to become homeowners and in metros with highly competitive housing markets such as Los Angeles, CA, and Urban Honolulu, HI, this share was below five percent.

Are U.S. home prices expected to fall?

The median sales price of existing homes stood at 391,500 U.S. dollars in the third quarter of 2022 and was forecast to decline slightly until the fourth quarter of 2023. The development of the S&P/Case Shiller U.S. National Home Price Index shows that home prices experienced seven consecutive months of decline between June 2022 and January 2023, but this trend reversed in the following months . Despite mild fluctuations throughout the year, home prices in many metros are forecast to continue to grow, albeit at a much slower rate. With the market chronically undersupplied due to the shortage of newly built homes to meet the demand, a dramatic decline in house prices is unlikely.