Housing Market Predictions For 2023: Part 1
As we move into the Spring season, we are thankful for warmer weather, and housing experts who maintain a watchful eye on the economy. As the economy is continuously pulled in all directions by high inflation, steep interest rates, ongoing geopolitical uncertainties, and recession fears, to name a few, we can depend on these individuals to help keep us educated about real estate trends in 2023.
Even as home prices seem to be dropping back down, high-interest rates and appreciated home values are still proving problematic for many prospective homebuyers. They are making it a challenge to access affordable housing in 2023. Hannah Jones, the economic data analyst at Realtor.com, said this in an emailed statement:
"[Home] prices remained 8.1% higher than the previous year which, coupled with mortgage rates up more than 250 basis points in the same time period, meant that buyers were still positioned to pay much more for a home than a year prior"1.
The National Association of Realtors (NAR) noted that, as of January 2023, the median existing-home sales price was up 1.3% (to $359,000). This was in comparison to one year ago, in January 2022. Some have pointed out that this is the 131st consecutive month of year-over-year price increases, which is a record increase rate, but it is important to note that the increase was at a slower pace when compared to December. Month-to-month existing-home sales prices continued to decrease since January and are now roughly 13% lower than their record high of $413,800 in June 2022.
However, much of the recent declines are erased due to rising mortgage rates. Joel Kan, VP and deputy chief economist at Mortgage Bankers Association, chimed in on this, saying:
“Mortgage rates increased across all loan types, with the 30-year fixed rate jumping 23 basis points to 6.62%—the highest rate since November 2022."
At the same time, total existing-home sales dropped 0.7% from December to January. This marked the 12th consecutive month of a decline in sales, down 36.9% from 2022.
Robert Frick of Navy Federal Credit Union touched on the current market, pointing out that, despite mixed messages, home shoppers can still find reason to be hopeful. Even though sales remain depressed from last year, he urged that this could be viewed as "another crack in the housing market that should benefit potential homebuyers as mortgage rates drop."