And a new Zillow analysis shows this year’s home buyers can expect competition for well-priced homes, especially at lower price points, but with less intensity than we saw in 2021 and early 2022.
Affordability will still be a challenge for many buyers this year, but sellers who price and market their home competitively shouldn’t have a problem finding a buyer. The slight drop in mortgage costs since October should revive demand after last fall’s slump, especially in more affordable markets and neighborhoods, but we are unlikely to see competition approach the fever pitch seen in the last two years.
Jeff Tucker
Zillow Senior Economist
BUYERS CAN STILL EXPECT COMPETITION FOR WELL-PRICED HOMES IN DESIRABLE AREAS
Redfin’s Homebuyer Demand Index dipped 1% from a week ago—the first drop after a month of upticks. Mortgage purchase applications also dropped 6%.
Those numbers represent the market’s reaction after recent disappointing news on inflation caused mortgage rates to climb. Some buyers are backing away from the market as rates again climb toward 7%.
The housing turnaround since November has coincided with what are typically the weakest three months of the year—forecasting the future of that can be dicey. The economic news from earlier this winter raised hopes for a soft landing of the economy and housing market, but the risk of renewed inflation or even a recession is still significant, and either would have a serious impact on the housing market.
Jeff Tucker
Zillow Senior Economist
Feb 21, 2023
