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.)
Related Stories
Affordability
Buyers Cite Unaffordable Prices as Biggest Hurdle to Homeownership in Q4 2022
Elevated home prices continue to pose an obstacle for house hunters, but most are persevering
Market Data + Trends
Despite an Ever-Widening Housing Shortage, Builders Are Slowing Their Pace of New Construction
The U.S. needs to add more than 1 million new housing units to chip away at a worsening supply deficit, but housing starts are expected to slow in the year ahead
Builders
Does Rebounding Home Builder Confidence Signal an Upcoming Economic Growth Cycle?
Despite falling demand from priced out buyers, home builders remain optimistic about the year ahead, and experts say that rising sentiment may point toward a breakout year for a recovering economy