2023 was a tumultuous year for the housing market, with record high interest rates and low inventory which left homebuyers struggling for affordability. Danielle Hale, chief economist at realtor.com, joined TheStreet's J.D. Durkin to recap the wild year that was in real estate.
Full Video Transcript Below:
J.D. DURKIN: Let's talk about the very difficult year that was in 2023 for the U.S. housing market. Break it down for us. What were some of the biggest challenges facing the market throughout this year?
DANIELLE HALE: Yeah, so the number one challenge in the housing market in 2023 was higher mortgage rates. We started the year right around 6% after a reprieve from mortgage rates that had been higher at the end of 2022. Then things kind of looked bright. But then throughout the year, we saw mortgage rates climb to new highs nearing 8%, according to the Freddie Mac mortgage rate index and surpassing 8% by some other mortgage rate tracker. So it's been a tough year for homebuyers because those higher mortgage rates mean less affordability for the housing market. And as a result, existing home sales tumbled as buyers found it challenging to make the math of buying a home work. So it was a tough year for home sales. Home prices maintain a surprising amount of resilience throughout the year, but overall, housing market activity was slower as affordability was the top challenge.
J.D. DURKIN: Danielle, remind me what percentage of homeowners who have a mortgage are locked in to rates below at or below, let's say even 6%, just a bit lower. But that's a big gap from where we've been over the course of the better part of the last year.
DANIELLE HALE: Yeah, so the most recent data showed that more than 90% of current homeowners have a mortgage rate that's under 6% So a vast majority is under current mortgage market rates. And then if you look another 2/3 or so have mortgage rates that are under 4%. So there are a lot of homeowners whose cost of funds right now, based on their existing mortgage, is much lower than where current market rates are and even actually lower than where we expect they're going to be moving into 2024.
