San Francisco

2023 was a challenging year for the U.S. housing market: mortgage rates hit a 2-decade high, housing inventory remained at historic lows, and sales prices continued to climb nationwide, putting homeownership out of reach for many consumers. Housing affordability remained a top concern for homebuyers, and for good reason: mortgage payments are up significantly from 2022, with a number of homeowners now spending more than 30% of their income on their monthly payment. As a result, sales of previously owned homes remained sluggish throughout the year, while the shortage of existing-home inventory helped sales of new residential homes steadily increase from last year.

Higher mortgage rates aren’t just affecting buyers. Many current homeowners purchased or refinanced their homes in 2020 or 2021, when mortgage rates were several percentage points lower than today’s rates. And while those pandemic-era mortgages have been a blessing for many homeowners, they’ve also kept others from moving. Rather than give up their current mortgage rate for a higher rate and a more expensive monthly payment, some would-be sellers have chosen to put their moving plans on hold, further limiting the number of homes for sale and driving up home prices in the process.

Sales: Pending sales decreased 25.6 percent, finishing 2023 at 4,120. Sold listings were down 27.4 percent to end the year at 4,092.

Listings: Comparing 2023 to the prior year, the number of homes available for sale was down by 19,7 percent. There were 612 active listings at the end of 2023. New listings decreased by 24.6 percent to finish the year at 6,209.

Prices: Home prices were down compared to last year. The overall median sales price decreased 9.1 percent to $1,315,000 for the year. Single Family home prices were down 12.9 percent compared to last year, and Condo/TIC/Coop home prices were down 8.3 percent.

List Price Received: Sellers received, on average, 103.0 percent of their list price at sale, a year-over-year reduction of 4.8 percent.

With inflation showing signs of improvement, the Federal Reserve recently announced they are likely done raising interest rates for the time being and plan to make at least three cuts to their benchmark rate in 2024. Mortgage rates have been dropping in recent months, which should help bring buyers and sellers back to the market and could lead to an uptick in both home sales and housing supply. Affordability will still prove challenging for many homebuyers, however, and economists predict U.S. home sales will remain down compared to 2019 - 2022. As for home prices, opinions are mixed, with some analysts expecting prices will hold steady or continue rising in areas, while others foresee a modest price drop in some markets.