The National Association of Realtors Chief Economist, Lawrence Yun, presented his 2023 forecast This Week in Real Estate during NAR’s fourth annual year-end Real Estate Forecast Summit calling for 4.78 million existing home sales and stable home prices. The forecasted number of existing home sales returns to the pre-pandemic level seen in 2019, which realized 4.765 million sales. While inventory of homes for sale is growing it is not a byproduct of new listings. For the 23rd consecutive week the number of new listings decreased compared to the same week a year ago, down 16% for the week ending December 10. Below are a few newsworthy events from the second week of December that influence our business:
NAR Forecasts 4.78 Million Existing-Home Sales, Stable Prices in 2023. Lawrence Yun, NAR chief economist and senior vice president of research, forecasts that 4.78 million existing homes will be sold and prices will remain stable in 2023. Yun predicts home sales will decline by 6.8% compared to 2022 (5.13 million) and the median home price will reach $385,800 – an increase of just 0.3% from this year ($384,500). He predicts foreclosure rates will remain at historically low levels in 2023, comprising less than 1% of all mortgages. After eclipsing 7% in late 2022, he expects the 30-year fixed mortgage rate to settle at 5.7% as the Fed slows the pace of rate hikes to control inflation. “The demand for housing continues to outpace supply,” Yun said.
Mortgage Demand Inches Higher as Interest Rates Move Lower. After a month of declines, mortgage application volume is rising, as current homeowners and potential buyers move on lower mortgage rates. Applications rose 3.2% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages did increase ever so slightly last week to 6.42% from 6.41%. But the trajectory for rates has been lower for the past month, as government reports showed inflation was cooling. Interest rates slid Tuesday after the release of the November consumer price index. “The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months,” said MBA economist Joel Kan.
Home Prices Just Hit a Turning Point After Nearly a Year, but Will Buyers Miss it Amid the Holidays? Home price growth fell to 9.5% for the week ending December 10, down from 10.3% for the week ending December 3. And that shift to single-digit growth is significant. This slowdown marks the first time in 49 weeks, nearly one year, that median home prices have advanced at a single-digit pace,” explains realtor.com Chief Economist Danielle Hale. And it’s not just home price growth dropping as 2022 comes to a close: Mortgage interest rates also dipped for the fifth week in a row. In the grand scheme of things, home prices remain high. Yet the recent reduction in price growth to 9.5% “marks a significant slowdown from peak growth earlier this year when listing prices were growing at a nearly 18% year-over-year pace,” says Hale. In late October, mortgage rates hit a 20-year high of 7.08% for a 30-year fixed-rate mortgage. This record-setting rate meant many buyers could no longer afford the same home they could have a year earlier, so many called off their search. Yet for the past five weeks, rates have declined, sinking to 6.31% for the week ending December 15, according to Freddie Mac. “Today’s home shoppers have the benefit of mortgage rates that are three-quarters of a point lower than early November’s high thanks to recently favorable inflation readings,” says Hale. The number of homes actively for sale for the week ending December 10 was up 55% compared with a year ago, indicating that home shoppers are taking their time to make an offer – if they make one at all. What wasn’t up was the number of new listings, which decreased by 16% for the week ending December 10 compared with a year ago. This marks 23 weeks in a row that sellers declined to add fresh listings to the housing supply. “Homeowners seeking to sell in this market will need a dose of patience to go along with a smart pricing strategy that takes local market conditions into account,” adds Hale.
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