The New Year has officially begun, and as we take a look back on 2022, many are wondering what 2023 will be like in regards to real estate. Inflation, employment, and the availability of housing as well as other factors, have housing experts taking a hard look at what the new year will bring and if it will be anything like last year.
With the holidays behind us, most everyone is picking back up where they left with their home selling or buying and now looking to the market to guide them. Currently, some economists believe that a mild recession is headed our way which will cause housing prices to finally drop. With a tamer inflation resulting in lower interest rates in 2023, buyers and sellers will have an opportunity to successfully navigate the real estate market.
What’s Ahead for the Housing Market
The National Association of REALTORS Chief Economist Lawrence Yun has stated that home prices are currently holding steady with some experiencing price gains. However, others, like California, are seeing a pull back in prices. Yun believes that interest rates will soften due to home building and dual curtailment of the sales of home as well as the spread between the federal funds rate and 30-year fixed mortgage rates.
Mortgage interest rates would be closer to 5.8% than 7% if the spread were closer. With consumers facing economic pressures from housing, still-high inflation, and interest rates, Yun says he expects a decline in home sales of about 7% in this new year. Once inflation is under control, his projections showcase a 10% jump in home sales and a 5% increase in the national median home price in 2024.
- Although existing home sales have declined, tight inventory led to an increase in the median sales price.
- New home starts are still below the national rate compared to homes built prior to the pandemic.
- The projected number of single family home starts in the new year is estimated to over one million.
It is important to note that although the housing market is expected to shift, buyers will face less competition, and because inventory is tight, sellers will be able to sell if they are priced right in the market.
In the real estate market, keeping up with trends and forecasts can be confusing especially because real estate market varies with each local market. Feel free to reach out to our team here at PRODUCER Realty and let us answer any questions you may have as well as help you buy or sell your next home.