U.S. Housing Market in 2004

In 2004, the U.S. housing market recorded existing-home sales averaged 6.78 million, new-construction sales of 1,203K, a median existing-home price of $185,200, and a 30-year fixed mortgage rate of 5.84%.

Year over year, existing-home sales rose 9.7% from 2003, new-home sales rose 10.8%, the median existing-home price rose 8.9% to $185,200, the 30-year fixed mortgage rose 0.01 points to 5.84%. Compared with five years earlier (1999), existing-home sales were 30% above 1999, median prices were 39% higher in nominal terms, the prevailing mortgage rate sat 1.59 points below the 1999 reading.

Macroeconomic Context

2004 was a re-election year. Real GDP grew 3.8%, CPI inflation rose to 2.7%, and unemployment fell to 5.4% by December. The federal funds rate, having held at 1% through May, began rising in June — the start of a 17-meeting tightening cycle that would push the rate to 5.25% by June 2006. Bush defeated Kerry in November. Hurricanes Charley, Frances, Ivan, and Jeanne caused $50B in damages in Florida and the Caribbean. Subprime origination reached $540B, accounting for roughly 19% of all mortgage originations and rising fast.

The Mortgage & Credit Market

30-year fixed mortgage rates rose modestly to 5.84% as the Fed tightened. Originations fell 25% YoY as the 2003 refi wave subsided, but purchase originations remained strong. Subprime ARM origination scaled aggressively: option-ARM loans (with negative amortization), stated-income loans, and 2/28 hybrid ARMs that reset to higher rates after two years became dominant subprime products. Securitization volumes through private-label RMBS reached $400B.

Cycle Position

Existing-home sales reached 6.78M. New-home sales hit 1,203,000. The median existing home cost $185,200, up 9% YoY. The cycle was clearly in late-stage bubble territory: prices were rising 9% annually while wages grew 3%, and subprime ARM products were enabling buyers who could not have qualified at conventional fixed rates.

The Year in Long View

Existing-home sales of 6.78M in 2004 represented 96% of the all-time annual peak (7.08M in 2005) and ran +241% above the modern-era trough of 1.99M (1982). New-home sales of 1,203K were 94% of the 2005 record (1,283K) and 393% of the absolute series low (306K in 2011). Combined U.S. home sales of 7.98M ran 95% of the 2005 all-time peak (8.36M total). Within the 2000s, the 2004 reading sat 19% above the decade average of 5.68M existing-home transactions per year. The median existing-home price of $185,200 translates to roughly $308,046 in 2024 dollars — about 76% of 2024's $407,500 record in real terms. Buyers in 2004 were not paying anything close to today's inflation-adjusted prices. Against the median U.S. household income of $46,326, the price-to-income ratio worked out to 4.0× — 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 5.84% sat 1.86 points below the full-history (1971–2024) PMMS average of 7.7% and 0.88 points below the 2024 reading of 6.72%. At that rate, the principal-and-interest payment on a $200,000 30-year mortgage would have been roughly $1,179/month. Year-over-year, existing-home sales rose 9.7% from 2003, new-home sales rose 10.8%, the median existing-home price rose 8.9%. Looking forward to 2005: existing sales would rise 4.4% to 7.08M, the 30-year fixed would rise 0.03 points to 5.87%.

The Buyer's Math: What $185,200 Bought in 2004

Down payment requirements on the median existing home in 2004 ranged from $9,260 at 5% down (FHA-style minimums) to $18,520 at 10% down (conventional floor) to $37,040 at the 20% threshold that avoids private mortgage insurance. With 20% down financed at the prevailing 5.84% 30-year rate, the principal-and-interest payment on the remaining $148,160 loan worked out to roughly $873 per month. Against the nearest-available median U.S. household income ($46,326 in 2005), that payment consumed about 23% of pre-tax monthly earnings — before property taxes, homeowners insurance, or maintenance. Over the full 30-year amortization, the buyer would pay roughly $166,160 in cumulative interest on top of the original principal. In 2024 dollars, the same purchase represents approximately $61,609 down and $1,452 per month — a useful translation for buyers comparing the 2004 entry point against today's affordability constraints.

Where 2004 Ranks in the 2000s

Within the 2000–2009 window, 2004's readings stack up as follows: existing-home sales ranked 2 of 10 years in the decade (decade peak 7.08M in 2005, trough 4.13M in 2008); new-home sales ranked 2 of 10 years in the decade (decade peak 1,283K in 2005, trough 375K in 2009); the median existing-home price ranked 5 of 10 years in the decade (decade peak $221,900 in 2006, trough $139,000 in 2000); the 30-year fixed mortgage rate ranked 8 of 10 years in the decade (decade peak 8.05% in 2000, trough 5.04% in 2009). The decade ranking is a tighter frame than the full 1963–2024 history and helps separate cyclical noise from structural shifts — a year that ranks mid-pack within its decade is often more representative of the period's typical conditions than the decade's extremes.

Nominal vs Real-Terms Trajectory

Tracking existing-home median price growth in nominal dollars overstates the buyer's real-world wealth gain whenever inflation runs hot, and understates it when inflation is subdued. Compounded annual growth rates around 2004: 5-year change (1999–2004): +6.8%/yr nominal vs +4.1%/yr real; 10-year change (1994–2004): +5.6%/yr nominal vs +3.1%/yr real. The five-year real-terms gain indicates housing outpaced general inflation over the window — a wealth-effect tailwind for owners but a headwind for first-time buyers.

Sources & Methodology

The 2004 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.

See also

• The full 1963–2024 data table
• 30-year fixed mortgage rate history
• Median home price history