2023 Annual Wrap-Up

Jan. 8, 2024, 9:59 p.m. Deep dive

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With thirty-year mortgage rates averaging over 6.8% through 2023 – and eclipsing 7% from August through early December – Indiana existing home sales retreated to 2014 levels, nearly 24% below the record-setting market of 2021. New listings fell even further behind historic norms as rising rates encouraged current homeowners to put off potential moving plans and cling to their pre-2022 mortgage terms.

But there are reasons to be optimistic about a 2024 recovery: The year-over-year sales gap between 2022 and 2023 narrowed in the fourth quarter and mortgage rates fell nine straight weeks to close the year as the Federal Reserve signaled an end to this unprecedented credit tightening cycle.

Economists remain split on the prospects of a national recession in 2024; Indiana economic and personal income trends have slowed relative to the U.S., but continued positive migration is a headwind for housing demand. Despite a persistent housing shortage driving prices higher, homeownership also remains a more affordable proposition in Indiana versus much of the U.S.

What to expect in this report

To wrap up the year, we'll cover the basics of the 2023 2023 housing market: Annual totals for sales, listings and sale price, inventory trends, how local markets fared relative to the state and how Indiana compares to the nation.

Next, we look at drivers of the housing market, such as population growth, home construction, and economic factors like employment and income trends. We also examine the latest statistics on equity among homeowners and dive into analysis of the relationship between interest rates, listings, and sales activity.

Finally, we lay out our expectations for 2024 based on existing data, analysis of recent trends and market intelligence from industry experts.

2023 Housing Market

December added 5,470 closed home sales across Indiana to bring 2023’s statewide total to 76,262, 14% below 2022 (and 24% behind the record-setting market of 2021).

Real estate continued to labor under the weight of rising mortgage rates, which averaged 6.81% through 2023—nearly a point-and-a-half higher than 2022 and more than double the historically-low rates that helped drive demand in 2021. Higher rates added hundreds of dollars to the monthly payments of a median-priced home in Indiana, squeezing many homebuyers out of the market—especially first-time buyers already pressured by inflation to save an adequate down payment.



-14% YOY



-12% YOY



+17% YOY

Median Price


+4% YOY

Rising mortgage rates lock in listings

Most buyers are also sellers, especially considering Indiana’s high homeownership rate (71%), and elevated rates also took a dramatic toll on the number of homes listed for sale on Indiana’s eight MLS marketplaces: 90,820 new listings in 2023 represented the first time annual listings fell below 100,000 in at least twenty years.

Many current homeowners pushed off potential moving plans to protect their pre-2022 loans rather than sell in a slowing market. Weekly data shows that listings flatlined from mid-April through the end of August at just over 2,100 per week before slowing into the fall, when normal seasonal trends would see listing activity peak in May and June.

This lock in effect is a relatively new phenomenon created by rates rising from historic lows to fifteen-year highs in less than twelve months. For more analysis on this trend, see the analysis section.

Inventory sees year-over-year increase, remains historically tight

Fewer listings kept overall inventory tight by pre-2021 standards. 10,976 homes were listed for sale on an average day through 2023, up 16% from 2022. But 2023 inventory levels were 9% below 2020 and more than 36% lower than 2019, when daily listings averaged over 17,400.

Looking back another five years, more than 40,000 daily listings were the norm in 2014—2022 represents a slight interruption in a decade of significant inventory decline.

Expressed differently, Indiana averaged less than a two month supply of inventory through 2023 (available listings to fulfill average monthly sales), marking the eighth straight year the state would be traditionally characterized as a “seller’s market” (below five months of inventory).

Limited supply meant even though sales activity was down, prices continued to rise and the market continued to move briskly (again, by pre-pandemic standards).

Limited supply drives price appreciation, market pace

Indiana’s statewide median home sale price hit an all-time monthly high of $256,000 in July, settling to $242,500 for the year—4% above 2022 and more than 15% higher than 2021 despite less buying activity.

Inventory pressure also kept days on market relatively low: The majority of homes sold in 2023 moved from listing to pending in less than two weeks (11 days average).

Finally, fewer new listings favored sellers negotiating during the busiest months of the year. Homes sold for more than 97% of their original list price from April through August, falling back to 95% by December with more inventory on the market and the usual post-Labor Day slowdown.

Peaks and valleys in market activity

Behind the annual totals, 2023 saw significant fluctuations in activity through the year.

Dramatic swings in mortgage rates again nudged the housing market out of its typical month-to-month patterns—thirty-year rates rose or fell by at least a half percentage point within a 4-5 week period five times during 2023, an unusually turbulent trend. Rates ranged from a low near 6% in early February to hitting 8% in late October.

A combination of shifting rates and inventory created a real estate rollercoaster quarter by quarter:

Local and regional trends

Indiana’s rural counties outperformed statewide sales trends on a year-over-year basis, as closings fell 13% from 2022 to 2023 (and just 5% in the fourth quarter). With more affordable median prices ($184,000 for the year), these communities may have attracted buyers willing to widen their search to match their budgets, or simply continued to capitalize on more evenly distributed population growth since 2020.

On the other hand, suburban price growth slowed (but still hit $327,000) and sales dropped more sharply (down 15% year-over-year). Hamilton County was an exception, where total sales (5,952) declined just 10% versus 2022 and the median sales price finished the year just below $425,000.

Staying in Central Indiana, Marion (12,178 sales) finished just below the statewide year-over-year trend (-16%); Johnson (-17%) and Hendricks (-16%) also fell just behind the state while breaking the 2,000 sale threshold (2,238 and 2,438 respectively). Among other large metropolitan counties, Lake (5,402 sales, -15%) nearly matched the state sales trend, while Allen finished in line (4,718 sales, -14%) along with Vanderburgh (-14% in sales with notable 9% price growth to $188,000).

Further east on the Ohio River, Clark County (1,837 sales) narrowed the state sales gap (-12%); the broader Southern Indiana REALTORS® Association area finished just 11% behind 2022 in sales.

The Terre Haute Area Board of REALTORS® (covering Sullivan, Parke, Vermillion, Clay and Vigo counties) closed 1,505 sales to finish with a similar 10% gap versus 2022.

Two areas that have been in the news with significant economic development announcements also saw solid housing demand in 2023: Boone County sales (1,274) finished just 5% behind 2022, while Howard County (Kokomo) finished 8% behind 2022 with 1,153 sales (and an unusual 10% year-over-year gain in new listings over the last three months of the year).

Despite slower sales across the state, some ZIP Codes stood out with positive sales growth. Of ZIP Codes with between 50 and 185 sales, the strongest growth was in 46409 (Lake County, 44% YOY growth), 47885 (Vigo County, 39% YOY growth), and 46554 (southwest of South Bend, 37% YOY growth). Of larger ZIP Codes, the fastest sales growth was in 46075 (Whitestown, 33% YOY growth), 47122 (Georgetown/Floyd County, 24% YOY growth), and 46373 (St. John/Lake County, 15% YOY growth). A ZIP Code in Westfield (46074) had the most sales (1,439) and grew 8% compared to 2022 (when it also had the highest number of sales).

Market Drivers


Indiana’s growth rate was steady at 0.4%, driven by increased international migration and another year of positive net domestic migration, despite a falling birth rate. Overall, Indiana added nearly 30,000 people, which would roughly translate to 12,000-15,000 new households.

Indiana grew by 29,900 people between 2022 and 2023, the largest population gain since the start of the pandemic. This 0.4% annual growth rate is slightly behind the U.S. (0.5%), but faster than all neighboring states. Indiana has maintained this moderate but steady 0.4% growth rate for the past decade, sufficient to lead the Great Lakes region in overall population growth while falling just below the nation.

Indiana’s growth was fueled by migration and an improved natural population change. Domestic migration remained positive at 4,600, though much lower than the 16,100 net domestic migrants of 2021. International migration reached a new high of 17,900.

Natural population change contributed 7,500 residents to Indiana’s growth. Births fell to 79,600, the second-lowest level of the past decade, but deaths also fell to 72,100 for a net gain of 7,500. Because of elevated death rates during the pandemic, births only outnumbered deaths by an average of 500 per year in 2021 and 2022. The number of deaths in 2023 is still higher than any year outside of the pandemic.

Economic Conditions

Indiana’s economic growth led most of the Midwest but lagged the U.S., while personal income grew slower than the U.S. and the Midwest. While the number of jobs in the state grew, unemployment also increased by 0.5 points to 3.7%.

Indiana’s economy grew at an annual rate of 1.8% through the first three quarters of 2023, consistent with other midwestern states but slower than U.S. GDP (3.9% annual growth). In the third quarter, Indiana’s economy accelerated to an annual growth rate of 4.8%, about as fast as the U.S. rate of 4.9%. That is faster growth than all Midwestern peers except Wisconsin.

In the third quarter, manufacturing contributed 2.1% to Indiana’s 4.8% real GDP growth, and retail contributed 1.3%. Real estate, including rental and leasing, grew by 0.2% while construction grew by 0.7%.

Indiana’s economy had been growing at a slower pace than the nation leading into the COVID shutdown, but saw a sharper rebound after the second quarter of 2020. This advantage in GDP growth persisted through 2021 but faded in 2022 through the first three quarters of last year as consumer spending shifted back to services and businesses rebuilt pandemic-depleted inventories (driving Indiana’s durable goods manufacturing sectors).

Personal income grew by 2.7% in the third quarter, slower than the U.S. rate of 3.5% and slower than all Midwestern states except Michigan. However, income growth increased compared to the first two quarters of the year. Annual income growth was 2.7% in 2022 as well.

Despite economic growth, Indiana’s unemployment rate has increased in the past year. Unemployment grew from 3.2% in November 2022 to 3.7% in November 2023. Indiana’s unemployment rate is now the same as the U.S. rate. The state’s labor force grew by 13,400, but the number of unemployed people grew faster, adding 17,300. There are a total of 125,200 unemployed people in the labor force. There are another 22,900 people who are not in the labor force but do want a job, meaning there are 148,100 potential workers. According to Indiana Department of Workforce Development, there were 103,300 active job postings in the state as of December 18, 2023. (Job postings are not seasonally adjusted.)

Employment did increase to record levels in the state, growing by 54,600 to reach 3.28 million workers. Indiana’s employment growth rate of 1.7% is slower than Kentucky, similar to Ohio, and faster than Illinois or Michigan. Because employment and unemployment are measured with different surveys and methods, employment and unemployment figures cannot be directly compared.

Home Construction

25,000 residential building permits were issued in the state through November; while 2023 had slower permitting activity than the last two years, this partial year total already tops every year from 2007-2020. Strong demand and anticipation of improved credit climates drove monthly permit totals to year-over-year growth in the fall.

This solid three-year permitting trend (2021-2023) still leaves Indiana scrambling to catch up from a decade of Midwest-leading population growth and household formation and lagging post-Great Recession levels of residential construction.

Permitting slowed to start 2023 but increased to positive year-over-year growth in recent months. Half of the state’s permits were issued in the Indianapolis region, which ranks 27th among all metro areas in total permits issued.

Through November 2023, permits were issued for 25,000 housing units, including 15,700 single-family units. (As of this publication, November is the latest available data.) Single-family permits fell by 12% compared to 2022 (year-to-date through November), but recent months have shown year-over-year growth in permitting activity. In November, permits were issued for 1,232 single-family homes, 21% higher than last November. In the last six months, only two had negative year-over-year growth.

The average value of single-family homes permitted in 2023 grew to $353,300, up 8% over November 2022. Because of the increased value of new homes, the year-to-date $5.3 billion in single-family permitting is only 4% down from the same period last year.

Three out of four Indiana permits were issued within a metropolitan area, and half were for homes within the Indianapolis region. In the Indianapolis metro area, single-family permitting flagged (down 20%), but multi-family permitting held steady. In the Fort Wayne metro area, permitting increased by about one fifth for single-family and multi-family units. Bloomington and Lafayette issued more multi-family permits this year but fewer single-family permits. In addition to Fort Wayne, Terre Haute and Michigan City are the only regions with more single-family permits this year. Single-family permits plummeted in Muncie, falling 65%, but also fell steeply in Columbus (down 27%).

There were 6,300 permits issued outside of metropolitan areas. These homes are in rural areas or small cities and towns not near a metropolitan center. Permitting in these areas fell 6% compared to 2022.

From 2022 to 2023, Indianapolis fell from 24th to 27th in total units permitted. The region was overtaken by Philadelphia, Fort Myers, Myrtle Beach, and Las Vegas.


Home Ownership and Race

Long-standing disparities in homeownership persist in Indiana, as with the nation. Three quarters of white households are homeowners—driving Indiana’s overall homeownership rate of 71%—compared to only 39% of Black households. Asian and Latino households fall in the middle, with homeownership rates of 60% and 58%, respectively. These gaps represent substantial missing potential in ownership, potential sales and listing activity, and wealth-building that comes with rising property values. If Black and White households owned homes at the same rate, there would be 95,000 more Black households participating in the real estate market.

There has been progress in closing the racial homeownership gap for some groups. Between 2019 and 2022, the homeownership rate among Latino households increased from 55% to 58%. Multiracial households (where the householder identifies as two or more races) jumped from 50% to 60% homeownership. This is not a small group, representing 131,000 households (6% of Indiana Households).

While the estimated homeownership rate increased from 37% to 39% for Black households, this increase is so small it may be caused by random error, or noise in the survey data. However, there are other signs of increased homeownership among Black households. The Census Bureau estimates the number of Black homeowner households increased between 0% and 14%, with their best estimate falling at 7%.

In fact, it is likely that all racial groups experienced a rise in the number of homeowner households in these three years. There's an 89% chance that there are more Black and Native American homeowners than before the pandemic. It is almost certain that the number of homeowners increased among Asian, White, Latino, and multiracial Hoosiers.

A note about homeownership data and race: Race is an individual characteristic, but homeownership is a household characteristic. The Census Bureau applies the race of the householder when measuring homeownership by race. The householder is the person who completes the survey for their household.

Home Ownership and Age

There is also a disparity in home ownership by age. Households led by someone of prime working age are 23% less likely to own their home than a household led by someone 55 or older. Among householders under age 55, 63% own their home, but among householders aged 55 or older, 81% own their home. This is relatively unchanged since before the pandemic—these rates were 60% and 80% in 2019.

The largest gap in homeownership is for households under age 35, where 46% own their home. This increased slightly from 43% in 2019, despite rising prices and a competitive market driving up the median age of first-time homebuyers.

At one level, this is commonsensical, as younger Hoosiers tend to earn less earlier in their professional lives and have simply had fewer years to build savings for an adequate down payment on a home (a task made more challenging by recent price appreciation and consumer inflation).

But the intersection of age and race also increase disparities for some groups of potential homebuyers. For example, while the median age of White person in Indiana is 41, the median age of Black Hoosiers is 33 and 26 for Latino Hoosiers (American Community Survey 2022 Estimates).

This demographic reality also provides an opportunity for high-leverage impact. Efforts to increase homeownership among younger households could help close racial gaps, and increasing homeownership among people of color could help close the age gap.

Indiana’s homeownership rate among younger householders can be viewed as a strength, in context with the U.S. in total. While lower than older Hoosiers, homeownership levels under 45 are 9 points higher than the nation, driving much of our overall advantage in homeownership rate.

More affordable housing (contributing to Indiana’s overall cost of living edge versus the U.S. as measured by Regional Price Parities) and lower median sale prices are an asset to younger residents making longer-term location decisions. Lower costs also mean the challenge of addressing racial disparities could be more manageable.


Rising rates have clearly cooled the housing market, but we set out to quantify the impact. Armed with this information, we can then forecast how the housing market will react to falling rates.

High Rates Always Impacted Demand, but Now Impact Supply

When interest rates are higher, this has a dampening effect on buyers. Since 2021, higher rates have also led to fewer listings. Since 2018, each one-point increase in the average 30-year mortgage rate has led to between 100-140 fewer pending sales per week. This relationship is common sense: higher rates mean more expensive payments. Higher cost dampens demand.

The impact of rates on supply is a new trend, however. Supply was not impacted by interest rates until they started to rise in 2022. You can see this in the chart below. As rates decline in 2018-2020, pending sales rise (magenta line), but listings are steady (teal line). Since 2021, rising rates have kept homeowners from selling. In fact, each one-point increase leads to 60-115 fewer listings per week.

It could be that interest rates have less of an impact on listings when they are not changing very much or are not very high. From 2018 to 2020, rates ranged from 2.7 to 4.9 and only changed by an average of five basis points week-to-week (0.05 points). Since 2021, the range is much larger (2.7 – 7.8), and change is happening faster, averaging 14 basis points per week. A little change in rates is not enough to impact a major life decision like selling a house, but with the rapidly rising rates of the last two years, sellers have been sidelined at a rate of around 86 per week for every one-point increase in rates.

Over the past six years, every 100 listings per week have generated 60-75 pending sales. Given this strong relationship, falling rates could have a double impact on sales. Falling rates could encourage more listings. Falling rates and increased listings will both act to create more sales.

Sales (and pending sales) are more sensitive to rates than listings are--in economic terms, listings are less elastic. This means that falling rates will likely not flood the market with enough supply to calm price increases. Instead, it is more likely that a slight increase in listings will facilitate a jump in sales, but price pressure will remain high as new listings are acquired quickly and supply remains low.


We base our forecasts on three scenarios, each representing a different interest rate projection. For our conservative scenario, we used a Fannie Mae projection that expects rates to end 2024 at 6.5%. For our middle scenario, we use a forecast from Lawrence Yun, chief economist for the National Association of REALTORS®. He expects rates to average 6.3% through 2024. (To implement this forecast, we assume rates start the year at 6.6% and end at 6.0%.) Our optimistic scenario assumes rates fall to 5.75% according to a projection by Greg McBride, chief financial analyst for Bankrate, and a similar projection from HousingWire.

Under these scenarios, we predict there will be between 94,300 and 96,700 listings, which is 4-7% more than 2023. There are likely to be more listings than 2023 but fewer than 2022 or 2021. We predict there will be 81,500 sales in our conservative scenario, where rates do not fall below 6.5%. This would be a 7% improvement over 2023, which had 76,262 sales, but fewer than the 88,868 sales in 2022.

Under our middle forecast, sales would total 83,200—9% higher than 2023. The half-point difference in interest rates between the conservative and middle scenario could result in about 1,700 more sales. Our optimistic scenario estimates 83,900 sales if rates drop below 6%. This would be 10% more sales than 2023.

Each of these scenarios is forecasted to result in a rebound from 2023 but not as many sales as 2022. In 2022, sales kept pace with the record-breaking 2021 market during the first five months of the year, when rates ranged from 3.2% to 5.3%. Though rates are expected to decline in 2024, they are still projected to average 6.3%. The most recent year with an average rate that high is 2007, on the eve of the Great Recession. With rates higher than they have been in 17 years (with the exception of 2023) we are optimistic for a modest rebound, but we do not anticipate a return to the super-heated pandemic market.

Go deeper

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