The Housing Market by the Numbers: Key Real Estate Statistics & Analysis

The U.S. housing sector encountered epic highs and lows over the past 15 years, magnifying long-term supply and demand imbalances. While strong price appreciation created major wealth for longtime homeowners, extraordinary gains priced out many prospective buyers, especially younger demographics.

As the market shifts in 2023, examining important real estate statistics offers window into the health and direction of residential housing. For buyers, sellers, renters, agents, investors and policymakers, understanding the latest data can help guide significant financial decisions in the years ahead.

Snapshot of Housing Stats and Notable Trends

Before diving deep into the data, here are some top-level highlights:

• Home prices – Median sale price hit new high of $428,700 in January 2023, up 10.8% from 2022. But growth is slowing rapidly as sales decline.
• Affordability – Sharply higher mortgage rates and prices push housing budgets out of reach for many. Just 26% of 2022 buyers were first-timers.
• Sales activity – Previously owned home sales dropped 17.8% in January 2023 from prior year as rising rates and inflation curb demand.
• Inventory – Active listings grew 30% in 2022 but still severely trail long-term targets of 6 months supply needed for a balanced market. Regional shortages for starter homes persist.
• New construction – Housing starts increased modestly in 2022 but fell short of the estimated 1.5 million annual unit deficit that accumulated over the past 20 years due to underbuilding.

See visual summary of key housing stats

These latest housing stats reflect a residential market undergoing a complex transition. The breakneck growth seen during the pandemic, while lucrative for some, exacerbated challenges for first-time buyers navigating limited options and budget constraints. A correction appears underway. But reversing systemic shortages and affordability issues won’t occur quickly without continued focus from stakeholders across housing finance, development, ownership and policy realms.

Tracking Home Sales Activity in Dynamic Times

The U.S. housing market rode an unprecedented wave between mid-2020 through mid-2022, as several factors aligned to supercharge demand. Ultra-low mortgage rates below 3%, remote work flexibility trends and excess consumer savings from stimulus measures all facilitated competition for homes just as millennials entered prime household formation ages.

The sales frenzy culminated in over 40% cumulative price gains in many metro areas within just two years. But the landscape looks vastly different today. As the Federal Reserve moves aggressively to contain inflation by boosting interest rates, housing affordability is weakening quickly. Transactions are slowing in response, especially for first-time buyers trying to navigate much higher monthly payments.

• The seasonally adjusted annual rate for existing home sales dropped to 4 million in January 2023, marking the 11th straight monthly decline according to National Association of Realtors (NAR) data. January’s 17.8% year-over-year decrease in closings was the largest since 2010 outside of the brief 2020 shutdowns.
• The falloff follows 30-year fixed mortgage rates crossing 7% last fall before retreating to 6.5% currently. But that‘s still roughly twice 2021 levels. Monthly principal and interest payments are approximately 50% higher for buyers now compared to 2020 based on median prices.
• Some analysts forecast the slide in sales volume could continue this spring or until more buyers adapt their budgets. But easing raw material and labor constraints may help stabilize housing construction costs, while moderating appreciation opens price cuts for some listings.

Home Sales Declined 17.8% YOY in January 2023

Data sources: NAR, Freddie Mac Primary Mortgage Market Survey

Well above historical norms for the past decade, current sales activity continues to correct from unsustainably hot levels. Further dips could occur in the near-term depending on economic conditions. But well-informed buyers can still move confidently. Seeing past the volatility requires taking a longer-term view grounded in individual financial timelines and risk tolerance.

Why Is Housing Inventory Still So Low?

Since 2018, a key factor exacerbating housing frenzies is the overall lack of homes available for sale. Coming out of the Great Recession when foreclosures mounted, investors and homeowners held off listing properties for years. Millennial household formations simultaneously accelerated, joining older generations in search of limited options.

As buyer competition intensified during the pandemic, construction simply couldn’t keep pace. Builders also concentrated more new units at the higher end. Entering 2023, for-sale inventory stands at just 1.7 million existing homes nationally across all price levels. That‘s only 3.3 months of supply at the current depressed sales pace.

Months inventory measures the length of time required to sell off all current listings at the rolling 12-month sales trend. Experts view 6 months as a balanced market. Markets undersupplied relative to local demand include San Jose, Sacramento, Los Angeles, San Diego and Denver. Examining local inventory data shows:

Top Undersupplied Housing Markets Ranked by Months Inventory

Data sources: Zillow Monthly Housing Trends, NAR

Digging deeper into constrained inventory reveals a mismatch between available homes and buyer needs, especially affordable entry-level units.

• New construction lagging – Housing starts climbed just 2% nationally in 2022 to 1.1 million units. But demographics and pent-up demand indicate the market needs at least 1.5 million additional single-family homes completed per year. Shortages of construction labor, materials, land and zoning delays all constrain faster building.
• Starter homes lacking – First-time buyers typically target the lower price tiers. But just 7% of new construction falls under $200,000. Limiting factors like development costs incentivize builders to construct higher densities of luxury apartment buildings or large single-family homes instead.
• Strong rental demand – As more younger generations get priced out of buying, competition swells for apartments too, pushing up rents. Investors acquiring more homes to lease out also reduces for-sale inventory. About 19% of home purchases went to non-owner occupants in 2022 who didn‘t move in themselves per Redfin data.

Refilling the inventory pipeline to properly meet demand won’t happen overnight but progress exists regionally. States like Georgia and Tennessee where land and regulatory burdens prove less onerous are growing stock faster. Metros like Atlanta, Dallas, Houston and Phoenix stand out for adding tens of thousands of homes annually catering to new residents. Though still undersupplied, these areas provide brighter prospects for ownership.

Shifts in Homebuyer Demographics Pose Future Opportunities

Prices and fast-paced bidding left many Americans dismayed amid dreams of finally owning real estate over the past two years. But who exactly is impacted most when market competition excludes large segments from achieving homeownership?

Home Purchases by Generation

Analyzing recent buyer patterns sheds light on which generations bear the brunt of extreme housing costs. In 2021, at the peak of sales frenzies, baby boomers and older Gen Xers purchased homes more frequently relative to their proportions of the adult population. By contrast, millennials and younger Gen Z adults trailed well below their population levels in ownership rates.

Data sources: National Association of Realtors 2022 Profile of Homebuyers & Sellers, U.S. Census Population Estimates

Millennials now over 40 million strong drive housing demand by sheer numbers. But staggering education debt balances and two major recessions hindered savings. Down payments remain obstinate for this group even amid moderate income gains. Unless inventory normalizes, millennials advancing through prime ownership lifecycles portends growing frustration.

Meanwhile Gen Z just reaching typical first-time buying age shows little market presence currently. Their housing outlook seems equally challenged unless affordable supply can expand soon from builders and policymakers.

But uncertainties abound over which generations will drive housing demand long-term. Perhaps baby boomers downsize at elevated rates freeing existing stock. Or millennials smarter about real estate after witnessing recent manias plan early to purchase at lower price points instead of overextending later.

My hunch is the housing needs of America‘s two largest adult generations prove more varied than stereotyped. Integrating medium density and entry-level housing across suburbs and downtowns can better serve this spectrum of buyers. Adaptive planning today allows communities to welcome more residents over time.

Reviewing Commercial Real Estate’s Evolutionary Path

Housing garners the most public attention. But commercial real estate rendering the offices, apartments, hotels, warehouses and medical buildings many Americans occupy merits equal focus. As work patterns and business investment priorities change, commercial developers and property owners adapt real estate offerings attempting to stay indispensable.

Total commercial real estate value held up well during 2022, appreciating 18% over 2021 to $17.5 trillion according to data firm Green Street. Performance diverged widely across categories though as operators reposition assets and tenants reassess space needs post-COVID.

Commercial Property Price Change Leaders – 2022

Source: Green Street Commercial Property Price Index (CPPI)

Real estate value often correlates with utilization and future cash flows. The outperforming property types above remain not only occupied but are experiencing tenant demand growth in an uncertain economic environment. However distress potential lurks across hotels, aging malls and office buildings saddled with obsolescence as companies downsize footprints.

Significant geographic and asset specific variances underlie the commercial landscape – Houston offices face different conditions than New York‘s for example. Well-located buildings suited for life sciences conversion or adding experiential retail achieve premium values. But commodity-like offices far from amenities struggle attracting tenants willing to commit long-term.

In an environment lacking much bargain inventory, investor capital keeps flowing into commercial real estate including major private equity funds like Blackstone and Brookfield. Over $350 billion poured into commercial real estate debt funds alone in 2022 to finance projects in need of loans. Lending to transitional properties requiring renovation or leasing turnarounds also surged. Patience and contrarian thinking can produce stable cash flow over time from overlooked niches.

Why Housing Affordability Keeps Slipping Away for Many

Housing affordability depends on more than just sticker prices – rising construction costs filter into home values. And with U.S. inflation recently hitting 40-year highs, runaway prices in non-discretionary categories like food, fuel and healthcare consume paychecks before millions even budget for a mortgage.

Skyrocketing rents also hamper saving for down payments. Even in markets where home prices stall out, overall ownership costs stretched further out of reach over the past year due to factors outside buyers’ control.

Measuring by key benchmarks, housing appears increasingly unaffordable for average Americans:

• Just $198,000 buys the median priced resale U.S. home when calculating historic 3x income lending limit for affordability. Median family income of around $66,000 supports mortgages of no more than $200k.
• At a typical 10% down payment of $43k and current interest rates, buying the median $430k home requires $2,600 monthly in housing costs including principal, interest, taxes and insurance – nearly 50% of median income devoted to shelter.
• The number of U.S. zip codes with median listing prices requiring mortgage payments exceeding 50% of median household income nearly doubled from 2020 to 2022, per Realtor.com housing data.

When housing costs consume over 30% of gross paychecks, they‘re deemed unaffordable by zoning standards. But today half of households now exceed that threshold, constrained from reasonably priced options.

See Interactive Affordability Gap Map

Still glimmers of hope exist in select areas for protecting affordable ownership. For example metro Atlanta median prices rose just 5% annually the past decade versus 11% nationally. Improving homebuyer programs also help lower hurdles through below-market mortgages, grants or debt relief. Until supply catches up, targeted assistance and community partnerships can slowly buoy buyers feeling shut out.

Key Takeaways for Housing Market Stakeholders

The last 15 years produced extreme highs and lows in U.S. residential real estate, distorting traditional cycles. Recent shifts now suggest prices and sales activity correct back toward balance into 2023. But constraints around inventory and affordability linger severe for many regions and buyers.

For prospective home seekers, pragmatism and financial prudence both serve well when evaluating options. Consider lengthening timelines or searching in more affordable secondary cities. Seek expert guidance navigating down payments, evolving rates and personalized tax situations from qualified lenders and advisors.

Existing homeowners enjoy handsome equity gains at record low rates. Monitor local markets closely when considering sales or refinances. Move cautiously chasing further appreciation but don‘t fear missing "peak" prices months back that spur panic offers.

Industry professionals like agents and property managers must showcase adapting value propositions as transactions moderate, such as guiding first-timers through hurdles. Commercial brokers can expect restructuring of portfolios and space utilization to persist over years not quarters.

Housing developers and investors will continue experiencing inflated building costs and complex public sentiment around density and gentrification. Patience and ingenuity both prove vital.

Policymakers play integral roles incentivizing affordable housing across a continuum – converting unused offices, enabling modular components and navigating zoning. Progress won‘t fit old models. Coalitions and balanced deregulation help.

While current conditions bring frustrating tradeoffs for many, real estate‘s centralized role in peoples‘ lives ensures continued innovation in how we buy, sell and utilize property.

Housing data and visualizations powered by Zillow, National Association of Realtors, Census Bureau, ApartmentList, Redfin, Realtor.com, ATTOM Data Solutions, Angi