Can Homebuyers Expect a More Balanced Market in 2023?
After years of wild fluctuations and volatility, homebuyers, sellers, owners, and renters can expect a more stable housing market in 2023, but those hoping for financial relief will likely be disappointed. Realtor.com’s annual housing forecast sets the stage for a year of climbing home and rental prices, and mortgage rates are expected to remain high, though any further gains will be modest in comparison to runaway growth seen throughout much of 2022.
As buyers continue to confront historically high home prices paired with soaring interest rates, sales will continue to fall in 2023, but rising inventory could convince some house hunters to make their way back into the for-sale 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.
Median monthly mortgage payments are expected to be about 28% larger than this year and twice as large as they were in 2021. To put into perspective how tapped-out homebuyers are, monthly mortgage payments were about three-quarters larger in late October than they were in 2021. (The latter figure depended on that week’s average mortgage rates.)