New Home SalesCENSUS
634K
U.S. Housing Market · 1973 · NBER recession
U.S. Housing Market in 1973
1973 peakOPEC embargofirst cyclical top
Existing SalesNAR
2.33M
Median PriceNAR
$28,900
30Y MortgagePMMS
8.04%
Builders sold 634,000 new homes in 1973 — the post-war buildout's first cyclical peak — before the OPEC oil embargo and 9% mortgage rates ended the run.
The arithmetic is bracing. New construction had risen from 460K in 1966 to 718K by 1972; 1973 set a near-record at 634K despite the autumn embargo. Existing sales reached 2.33M, the highest since NAR began tracking in 1968. The median new home cost $32,500 — up 32% in five years — and 30-year fixed mortgages averaged 8.04%, the start of a long climb that would peak at 16.63% by 1981.
Macroeconomic Context
1973 was the year the post-war American economic order ended. Real GDP grew 5.6%, but CPI inflation jumped to 6.2% as Nixon's wage-and-price controls were progressively removed. The October 1973 OPEC oil embargo, in response to U.S. support of Israel during the Yom Kippur War, quadrupled crude prices from $3 to $12 per barrel and triggered the deepest U.S. recession since 1958. The National Bureau of Economic Research dated the recession from November 1973 to March 1975. The federal funds rate peaked at 10.8% in August before the Fed began easing in late autumn. Unemployment ended the year at 4.9% but would rise to 9% by 1975. The Watergate scandal moved through the Senate Watergate Committee hearings; Vice President Spiro Agnew resigned in October.
The Mortgage & Credit Market
30-year fixed mortgage rates rose to 8.04%, the highest reading in the (then) young PMMS series. The S&L disintermediation cycle returned: as Treasury yields rose above Reg Q deposit caps, S&Ls lost deposits and could not write new mortgages. Builders accustomed to abundant construction financing began running out of credit by autumn. The combination of the oil shock, the rate spike, and S&L stress produced the deepest housing-finance crisis since the Great Depression — and Volcker's 1981 squeeze would prove to be even worse.
Cycle Position
New-home sales fell to 634,000, down 12% from 1972's 718K, as the fourth-quarter energy and credit shocks took hold. Existing-home sales rose to 2.33M — the resale market was less rate-sensitive than new construction. The median new home cost $32,500, up 18% YoY, as inflation began outrunning unit sales. The 1973 cycle would end formally in 1975, but the structural inflation regime had begun, and housing would not see another clean expansion until 1985.
The Year in Long View
Existing-home sales of 2.33M in 1973 represented 33% of the all-time annual peak (7.08M in 2005). New-home sales of 634K were 49% of the 2005 record (1,283K) and 207% of the absolute series low (306K in 2011). Combined U.S. home sales of 2.96M ran 35% of the 2005 all-time peak (8.36M total). Within the 1970s, the 1973 reading sat 15% below the decade average of 2.75M existing-home transactions per year. The median existing-home price of $28,900 translates to roughly $204,513 in 2024 dollars — about 50% of 2024's $408,000 record in real terms. Buyers in 1973 were not paying anything close to today's inflation-adjusted prices. Against the median U.S. household income of $10,512, the price-to-income ratio worked out to 2.7× — compared with 2024's all-time-high reading of 5.4×, which marks the most stretched affordability in the modern record. The 30-year fixed mortgage rate of 8.04% sat 0.34 points above the full-history (1971–2024) PMMS average of 7.7% and 1.20 points above the 2024 reading of 6.84%. At that rate, the principal-and-interest payment on a $200,000 30-year mortgage would have been roughly $1,473/month. Year-over-year, existing-home sales rose 3.6% from 1972, new-home sales fell 11.7%, the median existing-home price rose 8.2%. Looking forward to 1974: existing sales would fall 2.6% to 2.27M, the 30-year fixed would rise 1.15 points to 9.19%.
Sources & Methodology
The 1973 figures on this page come from three federal data sources: the U.S. Census Bureau Survey of Construction (annual new single-family home sales), the National Association of Realtors Existing Home Sales report (annual existing-home transactions and median sale prices), and the Freddie Mac Primary Mortgage Market Survey (annual average 30-year fixed mortgage rate). Recession bands are drawn from the National Bureau of Economic Research Business Cycle Dating Committee. Inflation adjustments use the Bureau of Labor Statistics' CPI-U series, and price-to-income ratios reference the Census Bureau's annual median U.S. household income table.