Hudson Valley Home Sales Decline Sharply In 2023: HGAR Report

HUDSON VALLEY, NY — The residential real estate market was hard-hit in 2023, and the region's realtors are pinning their hopes for 2024 on the Federal Reserve Board pausing, if not ending, its campaign of raising rates to tame inflation.

The Hudson Gateway Association of Realtors called it a "confluence of economic headwinds that included high interest rates, inflation, low for-sale inventory, as well as international conflicts and domestic political discord" in its year-end report released in early January.

Home sales were down by double-digits in each of the six counties that make up the HGAR market area (Bronx, Westchester, Rockland, Orange, Sullivan and Putnam counties).

HGAR's Putnam County Regional Director Aaron Velez, who is with Houlihan Lawrence, told Patch that 2023 compared with 2022 in housing was very similar in many respects.

Interest rates

"Mortgage interest rates remained high which had a direct effect on both home buyers and willing sellers who may have held off on their plans to sell," he said.

In January 2022, rates were 3.2 percent. By December of 2022, rates had nearly doubled to 6.2 percent. By the end of October of 2023, rates were as high as 8 percent.

"Since then, they have started to come back down and 2023 ended with rates around 6.6 percent," he said. "This downward trend is the direction we would like to see continue to get us to a healthier real estate market."

Interest rates have an impact on the average homeowner who owns a home worth $485,000 (the median home price in Putnam County), he said. With an 8 percent mortgage interest rate a homeowner could expect to pay about $2,850 per month compared to a 6 percent rate which would be about $2,326. That's a $521.00 per month difference.

"Add to this high inflation making the cost of all goods more expensive, that sort of increase really puts a strain on a buyer's ability to own a home," Velez said. "Additionally, higher interest rates give pause to many home sellers who locked in at a low interest rate of 3% or so back in 2020/21 when they could. With rates high, those sellers have less incentive to lose that rate for a new mortgage."

Post-pandemic sales

Home sales remained very low, a trend that continued throughout 2023.

"In 2021, we saw the most transactions in Putnam County in any year at 1,607," Velez said. "In 2022, that number decreased by 20 percent and in 2023, we saw an even steeper decline to just 945 transactions. That is a 41 percent decrease from 2 years ago and the least amount of sold properties in 8 years."

In Westchester County, total home sales were down 23.7 percent for the full year 2023. The Putnam County market posed a 26.1 percent decline. Home sales in Rockland County fell 25.7 percent in the 12 months. The decrease in home sales in Orange County for the full year was 25.5 percent, according to the HGAR report.

Data for the HGAR report was provided by association subsidiary OneKey MLS.

Property values

There was one positive: home prices rose throughout the region, driven at least in part by continued strong demand and historically low for-sale inventory. The same was true for condominiums, cooperatives and multi-family houses.

Home values in the region are much higher than before the COVID-19 pandemic.

"The median price of a single-family home in Putnam County in 2022 was $490,000 and in 2023 it was slightly lower at $485,000," Velez said. "But when we look back pre-pandemic, in 2019 when the median price of a single-family home in Putnam County was $358,500. The average homeowner's equity increased by 35 percent. For perspective, in a typical year, we would expect a 2-4 percent increase."

The supply of homes is the key to housing prices, he said. In 2023, the number of available homes actively on the market in Putnam County was 140. That was a 31 percent decrease from 2022 and a 57 percent decrease since 2020.

"With the current housing supply so low and buyer demand so high, sellers can expect to get top dollar," Velez said.

Future looks brighter

Local brokers are pinning their hopes on the Federal Reserve. The central bank remains on track to begin cutting its benchmark short-term interest rate, the Associated Press reported. A top Federal Reserve official said Tuesday that he is increasingly confident that inflation will continue falling this year back to the Fed's 2 percent target level, after two years of accelerating price spikes that hurt millions of American households.

"The mortgage rates do tend to follow the 10-Year Treasury yield. This is critical for the health of the real estate market. Lower mortgage rates will allow for more affordable housing to buyers," Velez said.

Christopher Waller, an influential member of the Fed's Board of Governors, said the timing and pace of the cuts would depend on the path of inflation and other economic data.

Lower mortgage rates would not only help alleviate the housing affordability issue affecting some buyers but also might encourage homeowners sellers to list their home knowing that they either need a small mortgage or no mortgage at all given their 35 percent increased equity position in the last three years, Velez said.

"Still, my outlook for 2024 is a positive one: real estate is not just an investment in bricks and mortar; it's an investment in the promise of growth and stability," said HGAR 2024 President Carmen Bauman. "So, let’s keep the faith and see what this year will bring!"

The Associated Press contributed to this report.