From Fortune Magazine:

Today’s housing market is drawing comparisons to both the 1980s and the 1990s drawing on mortgage rates and inflation. Data released by the National Association of Realtors shows that home sales in December 2023 were at their lowest level since 1995, even worse than during the Global Financial Crisis.

A report by NAR revealed that there are major differences between the housing market of today and that of 1995, including population and affordability. The US population was over 70 million people less in 1995 compared to today, yet the housing activity levels are similar.

One of the biggest differences between the housing markets of today and 1995 is housing affordability. In 1995, mortgage rates averaged 7.93%, but trends were downward. In 2023, they spiked to a two-decade high at 8%, making it harder for new homebuyers to enter the market. Home prices were also historically high in 2023, with NAR data showing the median home sales price in 1995 was about $114,000, but in 2023, it was nearly $390,000.

This has caused housing affordability to deteriorate. NAR uses the housing affordability index, which factors in house prices, mortgage rates, and the qualifying income needed to purchase a home. In 2023, the housing affordability index was 94.2, below the 100 mark, showing that purchasing a home was more difficult in 2023 than it was in 1995.



Read more: Housing market sales are the lowest since 1995—what is different in 2023