New Home SalesCENSUS
709K
U.S. Housing Market · 1979
U.S. Housing Market in 1979
Existing SalesNAR
3.83M
Median PriceNAR
$55,700
30Y MortgagePMMS
11.20%
In 1979, the U.S. housing market recorded existing-home sales averaged 3.83 million, new-construction sales of 709K, and a 30-year fixed mortgage rate of 11.20%.
Existing-home sales fell 4.0% from 1978. the median existing-home price rose 14.4% to $55,700. the 30-year fixed mortgage rose 1.56 percentage points to 11.20%.
By the numbers — 1979: new-home sales 709K, existing-home sales 3.83M, median existing price $55,700, 30-year mortgage rate 11.20%.
Macroeconomic Context
Nineteen seventy-nine marked the beginning of the end of the 1970s inflationary decade and the opening of one of the most wrenching periods in postwar monetary history. The Iranian Revolution removed approximately 3–4 million barrels per day of oil from global markets, sending gasoline prices soaring and consumer price inflation to roughly 11.3% for the year. President Carter appointed Paul Volcker as Federal Reserve chairman in August, and Volcker immediately signaled a fundamental break from the gradualism of his predecessors.
In October 1979, the Fed announced a dramatic change in operating procedure: instead of targeting the federal funds rate, it would target money supply growth directly — effectively removing the ceiling on how high short-term rates could rise. The federal funds rate, which had averaged around 10% early in the year, shot above 13% by year-end, with mortgage rates following to approximately 11.20% — up from 9.64% in 1978. The Depository Institutions Deregulation and Monetary Control Act began moving through Congress, promising to phase out Regulation Q and allow thrifts to pay market rates — a necessary reform but one that would expose savings institutions to devastating interest-rate risk.
Housing activity slowed sharply in the second half of the year as affordability collapsed. Buyers who had rushed to purchase in early 1979 — recognizing that rates were rising — were replaced by sidelined households who could no longer qualify for mortgages. The market was entering what would become the most severe housing recession since the Great Depression.