As the premier source of real estate information in the Lehigh Valley and its surrounding communities, the Greater Lehigh Valley REALTORS® (GLVR) is pleased to provide an in-depth report on the 2023 local housing market.
The following information is an overall look at the 2023 housing market, in addition to predictions for 2024.
2023: A Tale of Sluggish Sales Due to Mortgage Rate Stalemate
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 many homeowners now spending more than 30 percent of their income on their monthly payments. As a result, sales of previously owned homes remained sluggish throughout the year. At the same time, 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.
Digging Deeper into 2023 and the Numbers
Sales: Pending sales decreased 15.5 percent, finishing 2023 at 6,291. Closed sales were down 19.7 percent to end the year at 6,193.
Listings: Comparing 2023 to the prior year, the number of homes available for sale was down 30.3 percent. There were 488 active listings at the end of 2023. New listings decreased by 19.6 percent to finish the year at 7,191.
List Price Received: Sellers received, on average, 101.3 percent of their list price at sale. Year-over-year list price decreased 0.7 percent.
Distressed Homes: Foreclosure and short sale activity was expected to increase in 2023, and that proved true, but this activity was still a small percentage of the Lehigh Valley market. Through strong gains in equity seen by most homeowners in the last few years, the number of distressed sales has remained limited. In 2023, the percentage of closed sales that were either foreclosure or short sale finished the year at 1.0 percent of the market – or 59 properties out of the 6,193 closed for the year. This is an increase of 27 properties over 2022, which saw 32 distressed sales.
Prices: Home prices were up compared to last year. The overall median sales price increased 7.7 percent to $360,820 for the year. Single-family home prices were up 5.9 percent compared to last year, and Townhouse-Condo home prices were up 11.6 percent.
What to Expect in 2024
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, but this could lead to an uptick in home sales and housing supply. However, affordability will still prove challenging for many homebuyers, 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.
Full Annual Report
Curious to know what else the Annual Report contains? Contact a REALTOR® today for more information or for a full market analysis. Find your local REALTOR® at www.GLVR.org.
