With a new year ahead of us, what can we expect to see in the housing market? The research team at Realtor.com recently released their predictions for the real estate market in 2023:
1) Price growth will continue, but at a slower rate.
At the start of the pandemic, we saw record-low mortgage rates and skyrocketing housing prices. Now, almost three years later, we no longer have those low mortgage rates—but home prices are still on the rise. Price growth has slowed, however. During the first two years after the onset of Covid, home prices saw double-digit gains. In 2023, price growth is expected to slow to 5.4%.
2) Mortgage rates will increase in early 2023 and drop back to 7.1% by the end of the year.
The estimated average for the year as a whole is 7.4%.
3) Inventory of homes for sale will increase by 22.8%.
That’s a big jump from the 4% inventory increase seen in 2022. However, it’s important to remember that the total inventory in 2023 is still expected to be 15% lower than the 2019 average.
4) Home sales will decrease.
With the final tally of home sales in 2022 at about 5.3 million, that total was a 13.8% decline from 2021. “We anticipate that existing home sales will decline another 14.1% in 2023, registering an annual total of 4.5 million, their lowest since 2012 (4.66 million),” reports Realtor.com Chief Economist Danielle Hale.
5) More buyers may turn to adjustable rate mortgages (ARM) instead of fixed rates.
An ARM may allow them to save nearly $225 per month for the first 5 years. Be sure to review the terms of an ARM with your lender to decide if this option would be right for you.
6) Cross-market shopping will continue to be an effective buying strategy.
Buyers with the flexibility to look for homes outside of their current location will have the benefit of shopping in more affordable housing markets. This is a strategy that has been on the rise since 2021.
To learn more about what to expect for the 2023 housing market, read the full report at Realtor.com or reach out to your local real estate agent