What Can We Expect in the Housing Market for 2023?
The last couple of years has been volatile, making predictions tricky. Here’s a general look at the coming year.
Home Prices May Drop Just a Bit
Existing home prices in 2023 are predicted by some to fall about 5% nationally and potentially up to 10% or more in both high-priced areas and regions in which home values soared the most. If there’s a deeper recession, home prices could fall by 10% nationally or more in regions in which home prices are most disconnected from local incomes. Others are more cautious with predictions. The housing market has shifted considerably, but it’s still hard to say whether this means home prices will decrease in 2023. While prices have dropped from where they were at their peak this time last year, they are still above 2021 prices in many markets. Mortgage rates have stabilized a bit in December and offer activity seems to be resuming, as buyers are slowly coming back to the table.?
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Mortgage Rates May Offset
Moving forward, experts agree it’s still going to be all about inflation. If inflation is high, mortgage rates will be as well. If inflation continues to fall, mortgage rates will likely respond. While there may be early signs inflation is easing as we round out this year, we’re not out of the woods just yet. Inflation is still something to watch in 2023. Right now, experts are factoring all of this into their mortgage rate forecasts for next year. If we average those forecasts together, experts say we can expect rates to stabilize a bit more in 2023. Whether that’s between 5.5% and 6.5%, it’s hard for experts to say exactly where they’ll land. Based on the average of their projections, a more predictable rate is likely ahead.
Sales Are Slowing
One of the biggest causes of skyrocketing home prices during the pandemic was a lack of housing supply. Next year will see an improvement, but inventory will remain below normal levels. Currently, there is an equivalent of 3.3 months' supply of existing homes available for sale, according to NAR. Inventory is expected to increase by nearly 23% in 2023. That’s primarily because homes won’t be selling as fast, rather than due to sellers bringing new listings to the market. https://www.cbsnews.com/news/real-estate-2023-home-sales-to-drop-in-these-cities/
Call Lesa Miller at (812) 360-3863 or go online at HOMEASAP.COM/67278 where you can read her posts on other social media accounts and websites.