Market Trends: What Are Experts Saying About Rates and Home Sales?

When it comes to real estate market trends and predictions, it’s hard to know what to think. 

The housing market in America has seen a lot of unusual activity since 2020, and there’s no reason to be certain that that will change. 

Even many experts disagree about market trends for 2023—but that doesn’t mean there aren’t telltale signs and indicators that show where the real estate market will likely go. 

Housing predictions are notoriously fickle, and no one can predict any market trends with 100% accuracy. But if you know which professionals have based their forecasts on the right data and have the most historically accurate predictions—then they’re worth checking out. 

Let’s look at some of the latest predictions for market trends, especially regarding mortgage rates and home sales for the immediate and near future. 

What is currently happening in the housing market?

According to the chief economist at Realtor.com, George Ratiu, economic activity continues to expand as services and manufacturing still show growth but at a slower rate. 

Layoffs are at pandemic lows, and jobless claims have declined in the last week of October. These factors might indicate that the economy may be struggling, but it is still in the right territory. 

However, the Federal Reserve announced an increase in the fund’s rate this week by yet another 75 basis points, or .75%. Despite this increase, mortgage rates have declined, falling below the 7% threshold this week. 

All this market activity decreased the number of buyers on the market and, in turn, raised the housing inventory. Realtor.com’s data indicates that there were almost 190,000 more homes on sale this October compared to last year’s October. 

Furthermore, the share of properties with price cuts rose to 21%. Home prices are decreasing, and the homes themselves spend a longer time on the market. 

The numbers in Realtor’s quarterly cross-market report on housing demands indicate that Americans seek affordability wherever they can, even over state lines. 

There is a noticeable trend of buyers looking to escape from pricey coastal cities and move towards affordable Midwest and South locations. 

What are the experts predicting for the 2023 housing market?

The Mortgage Bankers Association just released its forecast for 2023. The outlook was presented by Mike Fratantoni, the Chief Economist and Senior VP for Research and Industry Technology, at its 2022 Annual Convention and Expo. 

The MBA announced that the total volume of mortgage origination is expected to decline in 2023 from $2.26 trillion to $2.05 trillion. 

Purchase originations are also forecast to decrease to $1.53 trillion next year, a drop of 3%. Refinance volumes, too, are expected to decline by 24% to $513 billion in 2023.

What does this mean for market rates in 2023?

Fratantoni stated that he believes the economy will continue to slow, which means longer-term rates, including mortgage rates, will start to fall from their current peak levels. 

However, volatility in rates will continue to be significant in the near term because of quantitative tightening by the Fed and central banks—especially as markets grapple with uncertainties in monetary, economic, and geopolitical policies. 

After the sharp increase of rates—doubling so far in 2022—the baseline forecast by MBA is that mortgage rates will end the next year at approximately 5.4%.

Joel Kan, the Deputy Chief Economist and VP at MBA added that the slowdown in housing activity will bring down the rate of growth for home prices and become “roughly flat” for 2023 and 2024. 

This theoretical trend, he said, would allow household incomes some necessary time to catch up to the elevated property values. 

“However, many local markets will see home prices decline,” Kan added, even if the national price measures generally remain unchanged.

What about housing inventory?

According to the National Association of Realtors Chief Economist Lawrence Yun, housing inventory has been trending downward for some time. 

Total inventory registered at the end of September 2022 was 1.25 million units, a decline of 2.3% from the previous month and 0.8% from the previous year. 

But he went on to say that multiple offers are still happening, and more than a quarter of the homes being sold are selling above list price due to the limited inventory. 

Is 2023 a good time to buy a home?

As we near the end of 2022, many real estate professionals are trying to predict how the housing market will evolve in 2023. Publications often exaggerate the story in their headlines to provoke readership, also known as clickbait. 

But if you look at the details more closely, you’ll see that the data suggests that home prices will grow but at a slower rate.  

Freddie Mac and NAR experts have predicted that the number of home sales in the new year will stay flat or slow to 5.4 million. Furthermore, home prices are forecasted to soften to a more standard growth rate of 2-4% for 2023.

So does that make it a good time to buy? Regardless of real estate market trends, if you are prepared to buy a home, then it’s a good time to buy. 

Even when the market flips to a buyer’s market, if you are not prepared to purchase a home, you shouldn’t. 

Even though the housing inventory is slimmer right now than in previous years, the most likely effect is that you might have to let go of some of the items on your wishlist. But in the end, regardless of the market conditions, hardly anyone gets all the items on their wishlist anyway. 

The bottom line—check out your best options for buying

The best way to find out your home-buying options is to talk to someone who understands how market trends, mortgage rates, and home sales work in America. 

Homefinity has decades of combined experience and a team of nationwide professionals who can coach you through your home investment choices. 

Get started with a free conversation with one of our experienced and professional loan officers. 

Together, we can find the best mortgage product with the best rates available to find your new home. 

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Photo by Mikhail Nilov