The housing market has experienced extreme highs and lows this year. Fluctuating house prices and mortgage rates are largely due to inflation, recession fears, and the economic policies of the US Federal Reserve. Ever-changing factors make the housing market in 2023 difficult to predict. Here are our predictions. it might surprise you.
mortgage interest rate
To combat record inflation, the Federal Reserve will steadily raise Federal Funds rates in 2022, and mortgage rates will follow suit. Financial firm Freddie Mac points out that the average interest rate on a 30-year fixed mortgage has more than doubled to 6.49%. (The pandemic has brought record-low interest rates to around 3%.)
Realtor.com expects mortgage rates to rise through early 2023, ending the year at 7.1%. We believe mortgage rates will continue to rise as the Federal Reserve continues to adjust for the effects of inflation. I have good news. Interest rates are likely to plateau and remain at around 7% on average. Remember, this is lower than the 7.76% average 30-year mortgage rate since 1971.
Economic factors and a surge in mortgage rates this year have effectively corrected the housing market boom seen in 2020 and 2021. Markets are likely to continue to cool in 2023, and house prices are likely to fall. The Case-Shiller National Home Price Index shows that home prices fell 2.2% between June and September in 2022, marking the first monthly home price decline since 2012. I’m here.
Home prices could continue to fall in 2023 due to what Forbes calls “home price pressure.” The pandemic-driven housing boom has pushed home prices up 40% of his, but those price spikes and fierce competition among buyers are stifling demand for homes into 2023. This slowing demand and trend toward higher interest rates has forced some home sellers to lower their asking prices. Forecasts predict that the median existing home price in the US will drop about 4% next year from $379,100 to about $368,000.
Home sales may continue to decline. After the Great Recession, he expects home sales to fall about 16% in 2023 to about 4.3 million units, the lowest level since 2011, according to his Redfin real estate agency. Inflationary trends, rising mortgage rates and the threat of a looming recession could deter potential buyers in 2023.
Sales in 2023
Consider your financial situation and future needs when buying a home. With the housing market rapidly readjusting, there is still good news for potential buyers. Instead of waiting for a better mortgage rate, talk to your mortgage lender to understand your credit score and get your mortgage pre-approved so you can buy a home within your budget. Also remember that mortgage rates are still below the historical average 30-year mortgage rate.
Thinking of selling? You may need to try harder to attract buyers. Home prices may need to drop to accommodate buyers dealing with rising mortgage rates. If your home is on the market, consider lowering the price of your home in line with rising interest rates.
Tina Sewell is branch manager for Rock Mortgage in Fayetteville. She has her 20+ years of mortgage experience. For more information, visit her website at: RockMortgageLending.comThe opinions expressed are those of the author.