U.S. News & World Report
According to real estate economist and contributing writer to U.S. News & World Report, Patrick Duffy, supply, demand and interest rates will not surprisingly, impact the housing market in 2023. Here are some takeaways from Duffy’s research.
- Home sales will be sluggish as interest rates remain elevated and existing home prices are predicted to fall about 5% nationally and could even drop 10% in high-priced markets. And if the economy enters a deep recession, housing price declines could exceed 20% to 25%.
- As 85% of existing homeowners are paying mortgage rates below 5%, this is causing new buyers to wait for rates to return to those levels again, creating a slow-down in home sales
- Affordability remains a constraint for younger home buyers, causing most to become renters or, if they’re able to work from home, relocating to more affordable markets in the Midwest, South and Sunbelt states.
- Existing home sales will slow, leading to prices falling in most markets.
- Builders will cut back on new single-family homes.
- Overall housing starts will scale back in 2023 and building permits will decline.
- Mortgage rates won’t fall substantially due to continued uncertainty about inflation as the Federal Reserve focuses on forcing inflation rate down to 2%. Plus mortgage investors are looking for higher rates with the expectation that new mortgages are likely to be refinanced in a few years when rates start to drop.
National Association of Realtors
The NAR is forecasting existing home prices to remain stable in 2023, even as the number of sales of existing homes decline, down 6.8% compared to 2022. The median home price is expected to only increase by 0.3% in 2023, raising the median home price to about $385,800, compared to a 9.6% gain in 2022, where the median price was $384,500. Economists also predict that mortgage foreclosure rates will remain at historic lows in 2023, with less than 1% of all mortgages in default. Rent prices, says the NAR, are expected to increase by 5% in 2023, compared to a 7% in rent prices in 2022.
