Housing market update-Q1 2023
The second quarter in 2023 will be different.
Housing market update for the first quarter of 2023. Mortgage rates dropped over 30 basis points in March, bringing more buyers back. In February, home sales prices fell for the first time in nearly 11 years, and total home sales rose by the most since July 2020. However, economists are divided on how much home prices will fall this year.
One reason is the nation’s housing shortage. Those who bought homes at record-low interest rates are staying put. Unfortunately, tight inventory also keeps prices from falling, making it difficult for many, especially first-time homebuyers, to afford homes.
Though home prices are still high, they’re not as high as they were in early 2022.
Even so, how much further home prices dip in 2023 will likely depend on where mortgage rates will go.
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Are Home Prices Dropping?
Housing market update: Over the past year, home sales prices have fallen and risen. The median sales price on March 24 was $390,987, down 3.9 percent year over year, according to HouseCanary. Closed listing prices have increased 5.7% from 5.2% in the past year. HouseCanary reported a 2% increase in its median listing price to $475.98 YTD. The difference between list and closing prices suggests that buyer expectations of their house price and their affordability are inversely related.
Housing Market Prices and Sales
In January 2023, the average U.S. home price was $705,212.1 However, most experts report on the median price, which rose 8.1% annually to $400,000.2
Remember, median means half of all homes were listed for more, and half were listed for less. The median property price is frequently better than the average. Because a tiny collection of extremely high or low-cost houses can throw off the average and make regular homes seem more or less expensive than they are. (Just something to keep in mind as you see the average house price in 2023 varies.)
This real estate market, like any other, is driven by supply and demand. Prices won’t drop since buyer demand is high and there aren’t enough properties for sale. They also won’t rise. They’re slowing down, but they’re still growing each month.
Housing Market Forecast for April 2023
As we enter spring homebuying season, housing specialists keep an eye on the economy, which is being pushed in many directions by high inflation, steep interest rates, geopolitical uncertainty, and recession fears.
However, encouraging tendencies are emerging. The National Association of Realtors (NAR) reported that February’s median existing-home sales price was $363,000, down 0.2% from a year earlier. A historic stretch of 131 consecutive months of year-over-year growth ends. According to NAR, total existing-home sales rose 14.5% from January to February, reversing a 12-month decline, but were still down 22.6% from a year earlier.
According to preliminary figures from the U.S. Census Bureau and HUD, housing starts jumped 9.8% in February, adding much-needed inventory. For the week ending March 30, Freddie Mac reported mortgage rates of 6.32%.
Certain buyers are returning due to falling rates.
during a press statement, Mortgage Bankers Association vice president and deputy chief economist Joel Kan noted, “Application activity increased as mortgage rates declined for the third straight week.” Buyers’ purchasing power has increased as home-price growth has slowed in many areas.
Some experts remain cautiously optimistic that the housing market is recovering, even as home price growth slows and sales transactions rise.
In an email, Navy Federal Credit Union corporate economist Robert Frick said, “Prices need to drop more, and across more markets, before a general revival can occur.”
Housing Inventory Outlook for April 2023
Since the great recession of 2008, low housing inventory has been a problem. It won’t recover in 2023.
Compared to other downturns, housing will remain flat and supply remains near historic lows, supporting higher home prices.
“Declining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers,” said Freddie Mac chief economist Sam Khater in a press statement.
NAR reports a 2.6-month supply of unsold inventory, up from 1.7 months a year ago.
“Inventory levels are still at historic lows,” said NAR chief economist Lawrence Yun in a report. Thus, many properties are receiving multiple offers.
Industry experts are pessimistic about inventory normalization based on this and other data.
Rick Sharga, executive vice president of market intelligence at ATTOM Data, expects low inventory to plague the housing market in 2023. Sharga says an influx of homes is unlikely because 70% of homeowners have a mortgage rate of 4% or less.
What’s the Average House Price in 2023?
The average home price in the United States is estimated to have averaged $705,212 in 2023. 1 – 1. But experts say the median grew 8.1% to $400.2. Experts agree that mortgage rates will reduce, but housing prices differ. Our experts expect national home prices to rise 5% or fall 4%.
The pandemic market’s double-digit price rises are unlikely.
Marr and Olsen expect 2023 pricing drops. Marr forecasts a 4% national median home price to drop from 2022, while Olsen expects 0.5%. Yun expects stable prices.
Realtor.com chief economist Danielle Hale believes insufficient inventory will keep home prices from falling too much. She expects prices to rise in the first few months before leveling out or falling after mid-year, concluding the year up 5.4%.
“Even though we’ve seen a pullback in demand, we’ve seen a very similar sized pullback in supply,” adds Hale.
Will rising interest rates lower home prices?
In point of fact, the rise in mortgage rates has not necessarily had an effect on the value of homes. A rise in interest rates is one factor that contributes to a decrease in the value of a home during a recession. In spite of the rapid increase in interest rates that occurred in 2022, it is possible that the housing market will continue to decline in 2023. If there is a high demand for homes, prices will shift in response.
Will House Prices Go Down?
Demand drives all home affordability aspects. Buyers would compete less for fewer residences if housing prices rose. Since our supply shortfall has lasted years, adding additional homes for sale may be best. Reduce buyer demand. Despite recent rate reductions, the federal reserve may boost rates in 2018. Mortgage lenders raise rates when the Fed raises rates.
When Should I Buy a Home in 2023?
Any mmarket’shome purchase is personal. Before buying a property, most people should be financially stable.
Use a mortgage calculator to determine your monthly housing expenditures.
Predicting this yyear’shousing market is risky. Neda Navab, CCompass’sU.S. region president, warns that buyers waiting for cheaper prices may be disappointed.
Navab predicts housing prices in the hotter markets of the past several years will decrease, but not nationwide like after the 2008 financial crisis.
Experts advise buying a home within your budget and needs rather than waiting for decreasing pricing. If a property you love in a location you love fits your budget, it may be appropriate for you. If you make too many compromises to acquire a house, you may develop bbuyer’sremorse and sell it.
Current Housing Market Key Takeaways for Buyers and Sellers
Be flexible, as prices may still be too high in the location you wish to buy a home.
“”f you desperately want a house and can work remotely or switch jobs, moving to lower-priced housing markets is a good idea,””adds Frick. “”illions of Americans have.”
Review your finances, gather documentation, shop various lenders, and improve your credit score in advance. So you can act quickly in a tight market when you find your dream house.
“”nly the best prepared, with their financing lined up, a solid understanding of what they can afford, and constant checking of prices and new listings, will succeed in ttoday’shighly-competitive market,””adds Frick. “”now your monthly payment—including taxes—and how it fits into your budget.”
Where is real estate the hottest right now?
The following six MSAs are the hottest housing markets from the first through fourth quarter, with Austin and Durham tied for third place:
71.7 Raleigh
67.5 Denver
Austin: 67.3 Durham:
67.3 Phoenix: 66.9
Richmond: 66.8
These markets have maintained their popularity even as workers have returned to offices and lending rates have risen, thanks to record-low mortgage rates and the need for more living space during the COVID-19 pandemic. Each MSA offers big-city facilities without the drawbacks of New York, Los Angeles, or Chicago.
Will 2023 Be a Good Year to Buy a House?
As we navigate the 2023 housing market, prospective buyers may wonder ifit’ss the right time to purchase a home. Several factors contribute to the answer, including housing inventory, pricing, economic trends now, and interest rates.Let’ss examine each aspect to help you make an informed decision.
1. Housing Inventory
Housing inventory is expected to gradually increase in 2023, providing buyers with more options and easing competition. However, if this growth fails to materialize or falls short of demand, prices may continue to rise. Whileit’ss challenging to predict the exact trajectory of inventory levels, monitoring this factor is crucial for identifying the best window of opportunity to buy.
2. Pricing Trends
Home prices have been on an upward trend, but the rate of growth has slowed compared to previous years. This deceleration provides potential buyers with the hope that affordability could improve in the coming months. However,it’ss essential to keep in mind that local market conditions can vary significantly, so researching your desiredarea’ss pricing trends and housing market predictions is crucial to determine if 2023 is the right time to buy.
3. Interest Rates
Interest rates for mortgage loans have increased in 2023, presenting challenges for many prospective buyers. Higher interest rates can affect affordability by raising monthly mortgage payments and reducing purchasing power. As a buyer, it’s essential to consider the impact of interest rates on your budget and to lock in the most favorable rate when you’re ready to buy.
Conclusion
2023 may be a good year to buy a house if housing inventory increases, price growth continues to slow, and you can secure a favorable mortgage interest rate. It’s important to closely monitor these factors and assess your personal financial situation before making a decision. By staying informed and financially prepared, you’ll be in a better position to seize the right opportunity when it arises.
Housing market update, Housing market 2023.
