It’s safe to say we’ve never encountered a housing market nearly as unpredictable as the one we’re in right now. After months of navigating wild fluctuations, homebuyers, sellers, owners, and renters are now desperately trying to read the tea leaves to figure out where real estate prices, inventories, sales, and mortgage rates are going in the coming year.
And just in time, Realtor.com® is here to help them all figure it out with our annual housing forecast.
The bottom line: Homebuyers and renters hoping for some financial relief in 2023 will likely be disappointed. But they won’t get whiplash either. The dramatic swings and wild gyrations in the housing market are expected to taper off as the real estate ecosystem continues to slow.
While the Realtor.com 2023 forecast anticipates home and rental prices will keep climbing next year, the increases will be much more modest than the huge surges seen earlier this year. Mortgage interest rates, which have become the bane of many first-time and other buyers who can’t pay all in cash, will remain high. But they aren’t expected to substantially rise again.
“It’s going to be a tough year for homebuyers, home sellers, and the overall housing market,” says Realtor.com Chief Economist Danielle Hale. But “we’re going to take some steps toward a better balance between buyers and sellers.”
One bright spot for buyers will be the number of homes for sale, which has been hovering near crisis level and is finally expected to rise. But will that be enough to bring buyers back into the market?
This is what homebuyers, home sellers, and renters can expect in the new year.
Home prices won’t drop, defying expectations
Simply put, higher mortgages have utterly bludgeoned the housing market.
Buyers, particularly first-timers, can’t afford to offer as much for a home when their monthly payments are inflated by higher interest rates. But home prices next year aren’t expected to crash.
Nationally, Realtor.com predicts they’ll rise 5.4% year over year in 2023. That’s still going to hurt—but not as much as the double-digit increases seen during the COVID-19 pandemic.
