What’s in store for the housing market this year? Home prices rose nearly 40% from the spring of 2020 to the spring of 2022, representing roughly a decade of price gains in just a couple of years. Will what went up also come down?
Housing experts and economists are not in agreement.
Economists’ predictions range from prices rising by around 5% this year, according to Realtor.com, to as much as a 22% decline from the peak in 2022 to the trough, according to John Burns Real Estate Consulting.
Where will home prices go?
Zillow forecasts that home prices nationally will decline by between 1% and 4% from last June’s levels, the 2022 peak.
“Seeing prices that are staying flat to 1% or 4% down puts us on the more bullish side for price changes of forecasters out there,” said Tucker.
But he said the tight inventory picture and strong unmet demand to buy a home suggests to him that, should mortgage rates drop a bit, there will be more movement in the market.
The National Association of Realtors projects prices will go up less than 1%, reaching a median price of $385,800 by the end of 2023. But NAR warned that even this small shift masks a lot of regional variability.
What can buyers expect with mortgage rates?
The days of 3% or 4% mortgage rates are gone for the foreseeable future, but rates will likely settle in below the pre-pandemic historical rate of 8%, according to housing economists’ consensus.
Mortgage rates tend to track the yield on 10-year US Treasury bonds. When that rate goes up, the 30-year fixed-rate mortgage typically goes up, too. When the Treasury rate goes down, so do mortgage rates.
In November, as mortgage rates started a six-week tumble, the median monthly mortgage payment fell by 1.8% to $1,977 from $2,012 in October, according to the Mortgage Bankers Association.
While mortgage rates are on the rise again, this improvement in affordability may play out again in 2023 when and if rates nudge down.
Forecasters, again, predict a wide range of where rates will go in 2023. While Realtor.com anticipates rates for the 30-year, fixed-rate loan will be above 7% in 2023, Zillow projects rates closer to 6% this year, ending the year at between 5.5% and 6%.
Comments