BAM's Key Details
- Realtor.com® released their 2023 Housing Forecast today.
- With the combination of higher mortgage rates and budgets tested by inflation, the cost of homebuying is not coming down in 2023.
- Instead, buyers will face less competition for a growing supply of for-sale homes.
Realtor.com® released their 2023 Housing Forecast today with mixed news for homebuyers—specifically those hoping 2023 will bring a drop in home prices to offset inflation and higher mortgage rates.
No such luck. Per the forecast, buyers shouldn’t expect a widespread decline in housing prices in the coming year. With the housing market undergoing a gradual adjustment—one that could last through 2025—it’s unlikely prices will go down on a large scale.
What buyers can look forward to, though, is less competition for a growing supply of for-sale homes.
We break down Realtor.com’s key predictions below.
REALTOR.COM’S 2023 HOUSING FORECAST HIGHLIGHTS
In a nutshell, here’s what you can expect in 2023 per Realtor.com’s forecast:
- Average mortgage rates at 7.4% — with hikes in early 2023 followed by a slight dip to 7.1% by the end of the year
- Rents—up 6.3% year-over-year—will outpace housing prices and likely reach new highs, further squeezing renter budgets
- Home sale prices won’t come down on a large scale, but price growth will slow to a single-digit yearly rate (+5.4%) for the first time since 2020
- Existing homes for sale will increase (+22.8% year-over-year) as the surge in inventory that began in summer 2022 accelerates
- Home sales will drop by 14.1% year-over-year to 4.53 million—the lowest since 2012
- The homeownership rate should hold steady in 2023
FOR-SALE INVENTORY IS EXPECTED TO INCREASE
According to the forecast, total housing inventory is expected to grow by 4.0% in 2022—and 22.8% in 2023.
In October 2022, active listings grew by 33.5% compared to October 2021, as homes spent nearly a week longer on the market than they did a year ago.
This doesn’t mean there will be a surplus of inventory. For context, inventory in 2023 is still expected to fall short of 2019’s average by 15%...
Dec 1, 2022
