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The current state of the US real estate market can be described as “complicated”. Rising mortgage rates over the past year have driven many potential buyers away from the market, resulting in lower demand and falling house prices.
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But prices are still historically high even after the recent drop – and mortgage rates are historically low although it has more than doubled in the space of a year. These trends, combined with the uncertainty surrounding an economy that continues to outperform expectations, make it difficult to predict where the housing market will go.
One thing is certain, and that is that US home prices have fallen from last year’s highs. In December 2022, average house prices rose 6.9% year-on-year, but fell 0.4% on a monthly basis, according to CoreLogic. Besides, real estate agent.com reported that median list prices rose 8.4% year over year in December, although they were down 11.1% from June 2022.
Many housing experts expect the market to weaken further in 2023 – but not all. Roundup of six real estate trends to know this month:
1. Activity will resume in the spring
This is one of the easier predictions since housing markets almost always see more activity in the spring. That should be especially true this year due to a combination of factors. For one thing, mortgage rates have trended lower over the past two months, which will positively affect affordability, increase demand and “bring more buyers back into the market,” Robert Dietz said. , chief economist of the National Association of Home Builders. told CNBC.
Meanwhile, an increase in inventory should also bring more buyers back into the market. As CNBC noted, real estate agents reported an earlier-than-usual increase in foot traffic at open houses. Some real estate agents have even seen a return to bidding wars.
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2. Prices will continue to fall…
Zillow analysts predict home prices will remain stable nationally and even fall in some parts of the country. Freddie Mac and the Mortgage Bankers Association expect a modest decline in the nationwide average price in 2023, Fortune reported. Freddie forecasts a decline of 0.2%, while the MBA sees average prices falling 0.6%.
“We expect a modest decline in home prices, but downside risks are high,” Freddie Mac economists wrote in a report.
3. …unless they don’t
Not all housing experts see house prices falling in 2023. A Fortune analysis found that the following organizations expect house prices to continue rising this year:
- Realtor.com: Its economics team predicts that the median price of existing homes 5.4% increase.
- Home.LLC: He expects U.S. home prices to climb 4% in 2023.
- CoreLogic: He expects year-over-year home prices to rise 3% from December 2022 to December 2023.
- National Association of Realtors: The trade group expects home prices to average $385,800 in 2023, a 0.3% increase from 2022.
4. Midwest markets set to heat up
Most Midwest Cities has avoided the kinds of home price spikes that have hit the rest of the country, meaning the region should be ripe for a busy buying season. “With the double hit of affordable housing prices and reasonable mortgage costs, [Midwest] states should top the list for first-time home buyers,” Zillow analysts wrote in a report.
5. You will see more choices on new builds
New homes currently under construction are up 50% since February 2020, according to Zillow, while completed homes are coming to market even amid a slowdown in buyer demand. Excess supply could lead to price declines in some markets.
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6. Mortgage rates should continue to fall
A number of housing and finance experts have said mortgage rates have already peaked and are expected to decline over the coming months. The MBA expects 30-year mortgage rates to end 2023 at 5.2% from around 6% currently, Forbes reported. NAR’s senior economist, Nadia Evangelou, told Forbes that “if inflation continues to ease – and that’s what we expect for 2023 – mortgage rates could stabilize below 6% in 2023.”
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