Buyers will face home price increases
nationally (+5.4%) and in all of the 100 largest markets in 2023,
but those who can afford to persist will find more inventory than
last year (+22.8%)
SANTA
CLARA, Calif., Nov. 30,
2022 /PRNewswire/ -- Amid higher mortgage rates
and budgets squeezed by inflation, homebuyers looking for
affordability in 2023 will find that prices aren't coming down,
according to the Realtor.com® 2023 Housing Forecast
released today. Instead, with the housing market beginning a
gradual adjustment that could last through 2025, what next year
will offer buyers is less competition for a growing number of
for-sale homes.
Overall in
2023,1 Realtor.com® forecasts
that buyers and sellers can expect:
- Average mortgage rates of 7.4%, with early 2023 hikes followed
by a slight retreat to 7.1% by year-end.
- Home sales prices won't come down, but growth will moderate to
a single-digit yearly pace (+5.4%) for the first time since
2020.
- Rents (+6.3% year-over-year) will outpace home prices and
likely hit new highs, further adding to budget pressures –
especially for first-time buyers.
- An increase in existing homes for sale (+22.8% year-over-year),
as the inventory refresh that began last summer accelerates.
- Home sales will decline 14.1% year-over-year to 4.53 million,
the lowest level since 2012 (see table below).
"Compared to the wild ride of the past two years, 2023 will be a
slower-paced housing market, which means drastic shifts like price
declines may not happen as quickly as some have anticipated. It
will be a challenging year for both buyers and sellers, but an
important one in setting the stage for home sales to return to a
sustainable pace over the next two to three years," said
Danielle Hale, Chief Economist for
Realtor.com®. "With mortgage rates continuing to climb
as the Fed navigates the economy to a soft-ish landing, higher
costs will lead to fewer closings, but that doesn't mean homebuying
will stop entirely in 2023. Americans who are determined to make a
move will find that staying up-to-date on the market, flexibility,
creativity and a healthy dose of patience will go a long way toward
success in the year ahead."
Key 2023 housing trends and wildcards
- A second wind in the second half. Although home sales are
expected to slow overall in 2023, Realtor.com®'s
forecast points to the possibility of a second wind in buying
activity in the second half of the year. With mortgage rate hikes
projected to continue through March, the Spring season will likely
be less busy than in a typical year as buyers and sellers
recalibrate their expectations around smaller budgets. This break
could provide space for demand to renew as mortgage rates dip later
in the year, when home shoppers will also have more options and
bargaining power.
- A trifecta of budget barriers awaits buyers. In 2023, incomes
are expected to grow (+3.9%), but not enough to offset higher
mortgage rates (7.4%) and home prices (+5.4%), creating a trifecta
of budget barriers. The typical monthly mortgage payment will be
$2,430, 28% higher than in 2022,
which will likely price many home shoppers out of the market. This
will especially be a concern for first-time buyers. As rents will
likely reach new highs, it will leave less room for saving towards
a down payment. At the same time, some home shoppers may consider
exploring new financial options like adjustable rate mortgages
(ARMs), a trend that has already begun to take shape in 2022.
- It isn't '08. During the mid-2000s housing boom, home sales
were elevated for more than five years, and it took another five
years for home sales to recover from the economic aftermath.
Comparatively, mortgage rate hikes have brought a quicker but less
dramatic end to the recent frenzy, during which buyers have been
better qualified than in '08. Moving forward, home price growth
will slow and may even decline periodically as prices largely
stabilize over the next two-to-three years. The homeownership rate
is predicted to hold in 2023.
- Some homeowners could still make bank. In 2023, the typical
homeowner is projected to gain $25,650 in equity as prices keep rising. With
real estate wealth already much higher than pre-COVID, these trends
offer a positive reality check for sellers who have been
increasingly pessimistic about entering the market as listing
prices have pulled back from last year's peak. While bidding wars
won't be the norm in 2023, sellers who have owned their home for a
longer period of time are still likely to make a profit. And those
living in relatively affordable areas may still command offers
above asking, driven by continued home shopper interest in
relocating to lower-priced markets.
- 2023 puts the "wild" in wildcards: Political and economic
events can always shake up the housing outlook, as was the case
with major financial shifts in 2022. Along with factors including
supply chain disruptions and the conflict in Ukraine, markets have largely begun to adjust
for these changes, such as with the Fed's efforts to combat
inflation with rate hikes. As such, forecasted 2023 housing trends
don't anticipate a major shakeup like a recession, but it's still a
possibility. Buyers and sellers should keep an eye out for risk
signs like a substantial weakening in the jobs market, beyond the
mild uptick in unemployment that is projected, as businesses are
potentially disrupted by shifting geopolitical, financial and
economic conditions. Although a potential recession may lead to
lower mortgage rates, ultimately buyers' purchasing power would
suffer. And for sellers, this would likely mean less demand and
potential price drops.
"Of the many factors that are expected to affect the housing
market in 2023, affordability tops the list of issues most likely
to make or break buyers' plans. Still, our forecast does offer
promise for home shoppers who are well-prepared. Tools like
Realtor.com®'s Buying Power can help you understand how
various rate changes and options impact your budget, and seamlessly
integrate into the home search experience to help you stay on track
financially," Hale added.
2023 Forecasted Housing Metrics & Historical Data –
National
Metric
(Full-Year
Avg.)
|
2023
Realtor.com® Forecast
|
2022
Realtor.com® Expectations
|
2021 Historical
Data
|
2013-2019
Historical Average
|
Mortgage
Rates
|
7.4% (avg.);
7.1% (year-end)
|
5.5% (avg.);
7.5% (year-end)
|
Avg. 3.0%
|
Avg. 4.0%
|
Existing Home Median
Sales Price
|
+5.4%
year-over-year
|
+10.2%
year-over-year
|
+17.0%
year-over-year
|
+6.4%
year-over-year
|
Existing Home
Sales
|
-14.1%
year-over-year
(to 4.53 million)
|
-13.8% year-over-year
(to 5.28 million)
|
8.5% year-over-year (to
6.12 million)
|
2.0% year-over-year (to
5.27 million)
|
Existing Home For-Sale
Inventory
|
+22.8%
year-over-year
|
+4.0%
year-over-year
|
-19.4%
year-over-year
|
-3.5%
year-over-year
|
Single-Family Housing
Starts
|
-5.4%
year-over-year
|
-9.6%
year-over-year
|
1.1 million
|
0.8 million
|
Homeownership
Rate
|
65.7% of U.S.
households
|
65.8% of U.S.
households
|
65.5% of U.S.
households
|
64.2% of U.S.
households
|
Rental Price
|
+6.3%
year-over-year
|
+7.7%
year-over-year
|
+10.0%
year-over-year
|
+5.0%
year-over-year
|
2023 Forecasted Housing Metrics – 100 Largest U.S. Metros (in
alphabetical order)
Metro
|
Forecasted 2023
Sales
Change (%
Y/Y)
|
Forecasted 2023
Price
Change (%
Y/Y)
|
Akron, Ohio
|
-0.8 %
|
3.8 %
|
Albany-Schenectady-Troy, N.Y.
|
3.0 %
|
4.7 %
|
Albuquerque,
N.M.
|
-3.0 %
|
5.3 %
|
Allentown-Bethlehem-Easton, Pa.-N.J.
|
1.9 %
|
4.7 %
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
-0.3 %
|
4.7 %
|
Augusta-Richmond
County, Ga.-S.C.
|
6.2 %
|
5.7 %
|
Austin-Round Rock,
Texas
|
-6.6 %
|
3.0 %
|
Bakersfield,
Calif.
|
-7.5 %
|
2.0 %
|
Baltimore-Columbia-Towson, Md.
|
4.9 %
|
5.5 %
|
Baton Rouge,
La.
|
-5.1 %
|
7.1 %
|
Birmingham-Hoover,
Ala.
|
-0.4 %
|
7.3 %
|
Boise City,
Idaho
|
-10.9 %
|
8.7 %
|
Boston-Cambridge-Newton, Mass.-N.H.
|
-0.6 %
|
9.5 %
|
Bridgeport-Stamford-Norwalk, Conn.
|
-6.5 %
|
5.9 %
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
6.3 %
|
6.0 %
|
Cape Coral-Fort Myers,
Fla.
|
-5.9 %
|
0.1 %
|
Charleston-North
Charleston, S.C.
|
-1.6 %
|
4.6 %
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
-0.3 %
|
5.5 %
|
Chattanooga,
Tenn.-Ga.
|
2.9 %
|
8.2 %
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
-2.1 %
|
3.1 %
|
Cincinnati,
Ohio-Ky.-Ind.
|
3.0 %
|
6.1 %
|
Cleveland-Elyria,
Ohio
|
2.7 %
|
4.3 %
|
Colorado Springs,
Colo.
|
-3.5 %
|
7.0 %
|
Columbia,
S.C.
|
7.7 %
|
3.6 %
|
Columbus,
Ohio
|
4.6 %
|
5.0 %
|
Dallas-Fort
Worth-Arlington, Texas
|
3.1 %
|
2.2 %
|
Dayton, Ohio
|
2.8 %
|
5.6 %
|
Deltona-Daytona
Beach-Ormond Beach, Fla.
|
-7.9 %
|
4.8 %
|
Denver-Aurora-Lakewood,
Colo.
|
-1.9 %
|
4.2 %
|
Des Moines-West Des
Moines, Iowa
|
4.1 %
|
6.3 %
|
Detroit-Warren-Dearborn, Mich
|
0.7 %
|
6.2 %
|
Durham-Chapel Hill,
N.C.
|
0.7 %
|
5.9 %
|
El Paso,
Texas
|
8.9 %
|
5.4 %
|
Fresno,
Calif.
|
-13.7 %
|
2.2 %
|
Grand Rapids-Wyoming,
Mich
|
1.6 %
|
10.0 %
|
Greensboro-High Point,
N.C.
|
2.2 %
|
6.2 %
|
Greenville-Anderson-Mauldin, S.C.
|
0.4 %
|
4.9 %
|
Harrisburg-Carlisle,
Pa.
|
4.7 %
|
3.0 %
|
Hartford-West
Hartford-East Hartford, Conn.
|
6.5 %
|
8.5 %
|
Houston-The
Woodlands-Sugar Land, Texas
|
2.9 %
|
4.5 %
|
Indianapolis-Carmel-Anderson, Ind.
|
-1.0 %
|
7.8 %
|
Jacksonville,
Fla.
|
-3.0 %
|
4.6 %
|
Kansas City,
Mo.-Kan.
|
1.9 %
|
7.2 %
|
Knoxville,
Tenn.
|
-1.0 %
|
7.1 %
|
Lakeland-Winter Haven,
Fla.
|
-5.0 %
|
1.6 %
|
Lansing-East Lansing,
Mich.
|
3.1 %
|
4.4 %
|
Las
Vegas-Henderson-Paradise, Nev.
|
-10.9 %
|
2.3 %
|
Little Rock-North
Little Rock-Conway, Ark.
|
6.2 %
|
4.6 %
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
-15.8 %
|
3.2 %
|
Louisville/Jefferson
County, Ky.-Ind.
|
5.2 %
|
8.4 %
|
Madison,
Wis.
|
-5.0 %
|
9.0 %
|
McAllen-Edinburg-Mission, Texas
|
-0.5 %
|
4.8 %
|
Memphis,
Tenn.-Miss.-Ark.
|
2.5 %
|
6.9 %
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
-2.0 %
|
3.4 %
|
Milwaukee-Waukesha-West
Allis, Wis.
|
0.4 %
|
7.7 %
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
-0.8 %
|
5.6 %
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
-3.4 %
|
5.0 %
|
New Haven-Milford,
Conn.
|
0.0 %
|
3.5 %
|
New Orleans-Metairie,
La.
|
-0.8 %
|
6.3 %
|
New York-Newark-Jersey
City, N.Y.-N.J.-Pa.
|
1.8 %
|
5.0 %
|
North
Port-Sarasota-Bradenton, Fla.
|
-28.7 %
|
3.2 %
|
Ogden-Clearfield,
Utah
|
-11.0 %
|
6.4 %
|
Oklahoma City,
Okla.
|
4.2 %
|
2.6 %
|
Omaha-Council Bluffs,
Neb.-Iowa
|
4.7 %
|
4.8 %
|
Orlando-Kissimmee-Sanford, Fla.
|
-8.5 %
|
2.9 %
|
Oxnard-Thousand
Oaks-Ventura, Calif.
|
-29.1 %
|
1.7 %
|
Palm
Bay-Melbourne-Titusville, Fla.
|
-18.3 %
|
2.8 %
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
0.6 %
|
5.7 %
|
Phoenix-Mesa-Scottsdale, Ariz.
|
-18.4 %
|
2.6 %
|
Pittsburgh,
Pa.
|
4.2 %
|
5.4 %
|
Portland-South
Portland, Maine
|
-4.6 %
|
10.3 %
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
-10.7 %
|
3.9 %
|
Providence-Warwick,
R.I.-Mass.
|
-7.0 %
|
9.8 %
|
Raleigh,
N.C.
|
-7.3 %
|
5.4 %
|
Richmond,
Va.
|
0.1 %
|
4.8 %
|
Riverside-San
Bernardino-Ontario, Calif.
|
-7.2 %
|
1.5 %
|
Rochester,
N.Y.
|
1.3 %
|
5.3 %
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
-12.1 %
|
3.7 %
|
St. Louis,
Mo.-Ill.
|
-0.4 %
|
4.6 %
|
Salt Lake City,
Utah
|
-7.6 %
|
5.8 %
|
San Antonio-New
Braunfels, Texas
|
2.5 %
|
4.6 %
|
San Diego-Carlsbad,
Calif.
|
-27.3 %
|
3.6 %
|
San
Francisco-Oakland-Hayward, Calif.
|
-13.3 %
|
3.3 %
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
-28.8 %
|
2.7 %
|
Scranton--Wilkes-Barre--Hazleton, Pa.
|
0.0 %
|
5.8 %
|
Seattle-Tacoma-Bellevue, Wash.
|
-10.3 %
|
6.8 %
|
Spokane-Spokane Valley,
Wash.
|
-6.1 %
|
9.6 %
|
Springfield,
Mass.
|
0.7 %
|
8.9 %
|
Stockton-Lodi,
Calif.
|
-8.6 %
|
6.4 %
|
Syracuse,
N.Y.
|
0.9 %
|
6.1 %
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
-15.6 %
|
3.9 %
|
Toledo, Ohio
|
4.2 %
|
6.7 %
|
Tucson,
Ariz.
|
-14.7 %
|
4.5 %
|
Tulsa, Okla.
|
1.8 %
|
4.6 %
|
Urban Honolulu,
Hawaii
|
-6.6 %
|
1.9 %
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
3.9 %
|
5.1 %
|
Washington-Arlington-Alexandria, DC-Va.-Md.-W.
Va.
|
-3.5 %
|
5.0 %
|
Wichita,
Kan.
|
-4.3 %
|
7.0 %
|
Winston-Salem,
N.C.
|
2.4 %
|
5.8 %
|
Worcester,
Mass.-Conn.
|
2.5 %
|
10.6 %
|
Methodology
Realtor.com®'s
model-based forecast uses data on the housing market and
overall economy to estimate values for these variables in the year
ahead.
About
Realtor.com®
Realtor.com®
is an open real estate marketplace built for everyone.
Realtor.com® pioneered the world of digital
real estate more than 25 years ago. Today, through its website and
mobile apps, Realtor.com® is a trusted
guide for consumers, empowering more people to find their way home
by breaking down barriers, helping them make the right connections,
and creating confidence through expert insights and guidance. For
professionals, Realtor.com® is a trusted
partner for business growth, offering consumer connections and
branding solutions that help them succeed in today's on-demand
world. Realtor.com® is operated by News
Corp [Nasdaq: NWS, NWSA]
[ASX: NWS, NWSLV] subsidiary
Move, Inc. For more information, visit
Realtor.com® .
Media Contact
press@realtor.com
1 Metrics reflect the forecasted 2023
average, unless otherwise noted.
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