Data revealed last week by the National Association of Realtors shows that existing home sales in December 2023 dropped to their lowest levels since 1995. The year had just 4.09 million transactions, even worse than figures from any month during the entire Global Financial Crisis, which was famously caused by a housing bust that put millions of people underwater on their mortgages. 

NAR expanded on the data with an economist report released Monday illustrating how today’s housing market compares to that of 1995, when there were 3.85 million existing home sales. The caveat, NAR says, is that the “world was much different” in the ‘90s, the last time home sales were this low. 

Housing market differences from the 1990s

The first major difference between these two housing markets is the total U.S. population. In 1995, the population was a bit more than 266 million, but today more than 336 million people live in the U.S., meaning that another 70 million people can barely match a housing activity level from nearly three decades ago, putting in perspective the historical drop in activity. What’s going on, to make things this bad?

“That answer becomes clear when looking at both inventory and affordability,” Jessica Lautz, deputy chief economist and vice president of research at NAR, wrote in this week’s report.

In terms of inventory, there were 1.58 million single-family homes up for sale in December 1995, compared to just 870,000 last December. Supply was 4.8 months in 1995 compared to only 3.1 months in 2023, she adds.

“2023 was actually worse than 1995 when accounting for population growth,” Mark Fleming, chief economist at Fortune 500 financial services firm First American, tells Fortune. “The larger the population, the more households and the more overall demand for shelter.”

To get more granular, NAR data shows that 144 homes sold for every 10,000 people in 1995, but just 122 homes sold for the same number of people last year. 

The other major difference between the two housing markets is affordability. In 2023, mortgage rates spiked to a two-decade high at 8%, which strained new homebuyers attempting to enter the market. Although mortgage rates in 1993 averaged 7.93%, according to NAR, they started trending downward by 1995, Fleming says. 

“As we know, mortgage rates went the other way in 2023, so affordability is worse now than then as well,” Fleming says. 

What’s more, home prices were historically high in 2023. The median home sales price in 1995 was about $114,000 ($227,000 inflation-adjusted), according to NAR, but in 2023 it was nearly $390,000. Mortgage rates and home prices together are typically the factors in defining overall housing affordability. NAR uses these factors plus the qualifying income needed to purchase a home to define a housing affordability index, which shows that purchasing a home was more accessible in 1995 than it was in 2023. 

“It’s helpful to look at sales price and mortgage rates, not only in the context of overall housing affordability, but also in how far one’s income can go when purchasing a home,” Lautz wrote.

NAR defines a score above 100 as being more affordable, and in November 1995, the housing affordability index was 126.9. The NAR index in November 2023, however, was 94.2. In 1995, homebuyers needed an income of just about $32,000, but in 2023 they needed a six-figure-plus salary. That means buyers spent about 19.6% of their income on housing in 1995, but now they spend more than 26%, according to NAR. 

While Fleming has made the case that the housing market of today is most closely related to the high mortgage rates and inflationary pressures of the 1980s, no decade is a perfect match in explaining the phenomena of the current homebuying landscape.

“2023 may well have the unique distinction of being incomparable and, hopefully, quickly a distant memory,” he says. “However, there’s reason for some measured optimism for more existing-home sales in 2024 as mortgage rates fall modestly, sellers stop striking, and affordability modestly improves.”