What will the housing market look like for the rest of 2023? According to experts, we should expect a buyers’ market, with welcome declines in both home prices and mortgage rates. Here’s what insiders have to say.
Buyers Will be Better Positioned
Realtor.com’s Chief Economist Danielle Hale sees the housing market benefiting buyers in 2023 with more homes for sale, which expands options and lessens the chance of bidding wars like those that raged in the recent past. Lending Tree economist Jacob Channel says, “mortgage rates might stabilize, prices could decline, and buyers may be able to negotiate with sellers more.”
NerdWallet’s Kate Wood predicts, “Home prices will likely continue dropping [in 2023], but this won’t be a bubble bursting. These price drops will be more like a balloon slowly deflating.” Redfin economist Taylor Marr agrees, predicting that the median home-sale price in the U.S. will drop by about 4% in 2023.
Mortgage Rates Will Fall…But They Aren’t Everything
Lawrence Yun, Chief Economist for the National Association of Realtors, says, “After eclipsing 7% in late 2022, the 30-year fixed mortgage rate will settle at 5.7% as the Fed slows the pace of rate hikes to control inflation. That is lower than the pre-pandemic historical rate of 8%.” Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, adds, “The housing market has certainly welcomed the recent decline in mortgage rates.”
RE/MAX CEO Nick Bailey doesn’t see the fluctuation of interest rates creating a seismic shift in the housing market landscape. He reasons that “people are getting married, divorced, moving to care for aging family members, relocating for career opportunities, and so on…it’s less about the interest rate or mortgage rates that week and more about their present situation.”
What types of mortgages will these people choose? Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute, thinks more folks will favor adjustable-rate mortgages, saying, “Would-be homebuyers should not fear this financial instrument…regulatory reforms instituted after the Great Recession have substantially mitigated their risk.”
Getting Back to Normal
Most experts agree that 2023 will be all about normalization. Bright MLS economist Lisa Sturtevent observes, “After big run-ups in housing costs in 2020 and 2021…2023 will be the first normal year for housing since 2019.” While Neighborhood Ventures CEO Jamison Manwaring says, “A return to a slower market with more modest price growth is a good place to be headed in 2023.”