The US housing market has been in flux over the past few years, with changes in home sales, median sales price, and median days on the market. While there have been fluctuations, the overall trend has been one of growth and increased demand.
However, several factors, such as rising mortgage interest rates and low housing inventory, have caused some areas of the market to slow down. In this blog post, we will delve deeper into these trends and explore what they mean for the US housing market.
Number of Homes Sold
In Q4 2022, there were 134,000 homes sold in the United States, which represents a decrease from the previous quarter Q3 2022, when 139,000 homes were sold. The decrease in home sales from Q3 to Q4 represents a percentage change of approximately 3.6% decrease.
Comparing Q4 2022 to the same quarter in the previous year (Q4 2021), there was a decrease of approximately 19.3% in home sales. This decrease is due to factors such as rising interest rates, lack of inventory, and higher home prices.
Analyzing the trend over the past five years, we can see that the number of homes sold in the US has been fluctuating. From 2018 to 2019, there was an increase of approximately 13.6% in Q4 home sales. However, from 2019 to 2020, there was a significant increase of approximately 20.5% in Q4 home sales, which could be attributed to the pandemic.
From 2020 to 2021, there was a decrease of approximately 18.3% in Q4 home sales, and the trend continued with a decrease of approximately 19.3% in Q4 2022. This recent decline could be attributed to an increase in mortgage interest rates, a tight inventory of available homes, and rising home prices, leading to affordability issues for buyers.
Median Sales Price
In Q4 2022, the median sales price of homes sold in the United States was $467,700, which is relatively stable when compared to the previous quarter Q3 2022, when the median sales price was $468,000. The difference in median sales price from Q3 to Q4 2022 is a percentage change of approximately -0.1%.
When comparing the median sales price to the same quarter in the previous year (Q4 2021), we can see there was an increase of approximately 10.4% in the median sales price in Q4 2022.
Over the past five years, the median sales price of homes sold in the United States has steadily increased. In 2018, the median sales price for Q4 was $322,800. From 2018 to 2019, there was a decline of approximately 3.9% in the median sales price for Q4. However, from 2019 to 2020, we see a reversal of that trend, as Q4 2020 shows an increase of approximately 6.3% in the median sales price compared to the same quarter of the previous year.
Looking at the most recent year, we can see a significant increase in median sales price, with Q4 2021 showing an increase of approximately 16.1% compared to Q4 2020. This trend continued into Q4 2022, where we see a further increase in the median sales price of approximately 12.7% compared to Q4 2021.
Overall, the data shows a steady increase in the median sales price of homes sold in the United States over the past five years. We see some minor fluctuations, but the trend has been relatively consistent. However, the past two years have seen a significant increase in median sales price, which could be due to factors such as low inventory, increased demand, and low interest rates.
Median Days on Market
In Q4 2022, the median days on market (DOM) for homes sold in the United States was 56, which represents an increase when compared to the previous quarter Q3 2022 when the DOM was 43 days. The difference in median DOM between Q3 and Q4 2022 shows a percentage increase of approximately 30.2%.
When comparing the median DOM to the same quarter in the previous year (Q4 2021), we can see an increase in the median DOM, where DOM was 48 days. This increase represents a percentage change of approximately 16.7% in the median DOM in Q4 2022 compared to Q4 2021.
Analyzing the trend over the past five years, we can see a steady decrease in the median DOM for homes sold in the United States. In 2018, the median DOM for Q4 was 72 days, which then dropped to 48 days in 2021, representing a decrease of approximately 33.3% over that period.
However, this trend has experienced a reversal since the start of 2022. The median DOM was 45 days in Q1 2022 and dropped to 31 days in Q2 2022. But from Q3 to Q4 2022, we see an increase in median DOM by 30.2%, indicating an ongoing shift in the housing market towards a more balanced market.
Several factors could be contributing to the increase in the median DOM trend, such as rising mortgage interest rates and increased demand for affordable homes, leading to a decrease in housing inventory. As such, sellers are receiving fewer offers and taking more time to receive attractive bids.
Unemployment Rate
The United States unemployment rate in 2023 has been steadily declining, reaching a low of 3.5 percent in March. This is the lowest jobless level since May 1969 and is a sign of economic recovery following the pandemic. However, this decline in unemployment has had an unexpected consequence on the housing market.
As more people find jobs, they are increasingly looking to purchase homes as well. This increased demand for housing has caused prices to rise significantly, making it difficult for many people to afford a home. In addition, there is a shortage of available properties due to limited construction activity over the past few years. This combination of factors has resulted in a competitive housing market with bidding wars becoming increasingly common.
GDP
The United States GDP rate in 2023 is projected to be 2.90 percent, according to Trading Economics global macro models and analysts. This growth rate is expected to speed up over the next few years, averaging 2.4 percent a year from 2024 to 2027. This economic growth is essential for the housing market in the United States, as it allows for more investment and development opportunities.
Inflation-adjusted gross domestic product (GDP) increased 2.6% for the final three months of 2022, which was a healthy amount of momentum entering into 2023. This momentum will help fuel further economic growth throughout the year, allowing more people to invest in housing and other real estate opportunities.
The US economy has been doing well since 2021 when the GDP growth rate was 5.95%, an 8.71% increase from 2020. This upward trend is expected to continue throughout 2023, with GDP growth rates remaining steady or increasing slightly throughout the year.
Overall, the US economy looks strong heading into 2023 and this should have a positive effect on the housing market in the United States. With continued economic growth and low interest rates, now is an excellent time for people to invest in real estate or purchase a home of their own if they are able to do so financially.
Population Growth
The United States population growth rate in 2023 is showing an early indication of recovery. According to the 2022 national and state population estimates released by the U.S. Census Bureau, the resident population increased by 0.4%, or 1,256,003, to 333,287,557 in 2022. This is a rebound from last year when population growth almost stalled due to the pandemic.
However, this tepid rise in U.S. population growth is being buoyed mainly by immigration and not because of Americans having more babies as birthrates remain low across the country. The nation’s 2021-22 growth rate of 0.38% is still among the lowest since 1900 and without immigration it would be much closer to zero percent.
This slow but steady increase in population has had a direct impact on the housing market in the United States as well, with demand for homes increasing significantly over the past few years due to people moving into new areas or looking for bigger homes for their growing families. This has caused home prices to rise across many parts of the country as supply struggles to keep up with demand, making it more difficult for first-time homebuyers and those on lower incomes to enter the market and find affordable housing options.
Overall, while there are some positive signs that US population growth is slowly recovering after a period of stagnation due to Covid-19, this increase in numbers is unlikely to have a significant effect on housing affordability anytime soon unless there are drastic changes made at both local and federal levels to make housing more accessible for all Americans regardless of income level or location.
Conclusion
In conclusion, the US housing market has seen some significant changes and trends over the past few years. The number of homes sold in the US has fluctuated, with recent quarters showing a decline due to various factors such as rising interest rates and a tight inventory of available homes. However, the median sales price of homes sold in the US has steadily increased over the past five years, with significant increases seen in the past two years. Meanwhile, the median days on market trend has reversed in recent quarters, indicating a shift towards a more balanced market.
As the US economy looks strong heading into 2023, with continued economic growth and low interest rates, now is an excellent time for people to invest in real estate or purchase a home of their own if they are able to do so financially. However, the slow but steady increase in population has had a direct impact on the housing market, with demand for homes increasing significantly over the past few years, making it more difficult for first-time homebuyers and those on lower incomes to find affordable housing options.
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