Housing Market Forecast for the Rest of 2023

As we move into the latter half of 2023, the housing market remains a focal point of interest for homeowners, buyers, and investors alike. The past year has been marked by fluctuations and uncertainties, but what lies ahead for the real estate sector? Let's dive into the expert forecasts and examine what we can expect for the rest of 2023.   Home Prices: A Positive Growth Trend The housing market's pulse is often measured by changes in home prices. As we look ahead, it's evident that the direction of home prices will vary by local market. However, the overall trend shows a positive growth trajectory. Numerous experts have weighed in with their predictions, and the average of their forecasts suggests that we can expect a 0.7% increase in home prices for the remainder of the year. Here's a breakdown of the latest price growth forecasts from prominent entities: Fannie Mae: 3.9% MBA (Mortgage Bank Association): 0% NAR (National Association of Realtors): -0.4% Realtor.com: -0.6% Average: 0.7%   Mortgage Rates: Cooling Off with Inflation The dynamics of mortgage rates are intrinsically linked to inflation trends. As we progress through the latter part of 2023, experts anticipate that mortgage rates will ease due to the cooling off of inflation. Let's take a closer look at the projected mortgage rates for both the third and fourth quarters of 2023: Quarter 3 of 2023: Fannie Mae: 6.8% MBA (Mortgage Bank Association): 6.6% NAR (National Association of Realtors): 6.5% Average: 6.63% Quarter 4 of 2023: Fannie Mae: 6.6% MBA (Mortgage Bank Association): 5.9% NAR (National Association of Realtors): 6.3% Average: 6.27%   Home Sales: A Steady Pace Despite Low Inventory One of the persistent challenges in the housing market has been the issue of low inventory. However, experts remain optimistic about home sales for the year. Despite the challenges, they project that around 5 million homes will still be sold in 2023. Here are the total home sales forecasts for 2023 in millions, as per expert estimates: Fannie Mae: 4.9 million MBA: 5 million NAR: 5.1 million Average: 5 million   The housing market in 2023 has shown resilience, with positive price growth predicted by experts in many areas. While mortgage rates may fluctuate, the historical trend suggests they are likely to ease in line with cooling inflation. Additionally, even with low inventory posing challenges, the projected sales figures for the year indicate a steady pace of transactions. Whether you're a homeowner, buyer, or investor, staying informed about the housing market is crucial. As we continue through 2023, keeping an eye on local market trends and national forecasts will help you make informed decisions in this dynamic real estate landscape.

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Overcoming Hesitations as a Seller in Today's Market

Many homeowners thinking about selling may have concerns holding them back. Two primary factors are the current higher mortgage rates and the fear of not finding a suitable property amidst the low housing supply. Let's address these challenges and provide valuable advice to overcome them.   Challenge #1: Reluctance to Take on Higher Mortgage Rates According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below). However, today's typical 30-year fixed mortgage rate for buyers is closer to 7%, leading many homeowners to hesitate moving to a new home due to higher borrowing costs. This situation is commonly known as the mortgage rate lock-in effect.   Our Advice: Timing is Key While experts project that mortgage rates may gradually fall as inflation cools, waiting may not be the best option. Mortgage rates are challenging to predict accurately, and meanwhile, home prices are on the rise. Selling now could mean avoiding higher home prices when purchasing your next property. If experts are right and rates do fall, you can always consider refinancing later if the opportunity arises.   Challenge #2: Fear of Not Finding the Right Property With many homeowners reluctant to take on higher rates, the number of homes available on the market decreases, resulting in low inventory. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains that inventory will remain tight in the coming months and even the next couple of years. This limited housing supply may make you hesitant to sell, fearing that you won't find a suitable property to purchase.   Our Advice: Expand Your Search If the fear of not finding your next dream home is holding you back, consider exploring all your options. Look at various housing types, including condos, townhouses, and newly built homes. Additionally, if your work situation allows it, consider areas you hadn't previously searched. Being more flexible with your location can open up more affordable options and increase your chances of finding the right property.   Instead of dwelling on the challenges, focus on what you can control. Reach out to a local agent with the expertise to navigate these waters and find the perfect home for you. Taking proactive steps and being open to various possibilities can help you overcome hesitations and make the most of today's real estate market.

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Embrace the New Normal: Homebuyers and the Mortgage Rate Shift

Before making a decision to sell your house, understanding the current housing market is crucial. The good news is that homebuyers are adapting to the new normal of today's mortgage rates, creating positive trends in the real estate landscape.   Steady Rates, Confident Buyers To shed light on recent mortgage rate trends, take a look at the graph below, illustrating the 30-year fixed mortgage rate from Freddie Mac since last October. Rates have remained relatively stable, hovering between 6% and 7% for the past nine months.   According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), mortgage rates play a significant role in buyer demand and home sales. Stable rates have led to consistent home sales in recent months, which is encouraging news for sellers.   Strong Market, Consistent Sales When mortgage rates surged dramatically last year, reaching nearly 7%, potential buyers were initially hesitant, causing some to postpone their plans to buy a home. However, as time passed, buyers have grown accustomed to current mortgage rates, accepting that the historically low rates from previous years are no longer the norm. Doug Duncan, SVP and Chief Economist at Fannie Mae, affirms that consumers are adapting to the idea of higher mortgage rates becoming the foreseeable future.   In fact, a recent survey by Freddie Mac indicates that 18% of respondents plan to buy a home in the next six months, highlighting active buyer interest in the near future.   While mortgage rates significantly influence buyer demand, other factors also contribute to their decision-making process. Job relocations, lifestyle changes, and personal motivations continue to drive homebuyers, ensuring there is a strong market for your house today.   Buyers are gradually embracing today's mortgage rates as the new normal. The stability in rates has resulted in robust buyer demand and consistent home sales. Now is the perfect time to connect with a local real estate agent to list your house and attract these confident buyers.

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