Home buying forecast: Trends to know in 2023• https://talkbusiness.net by Tina Sewell
Ever-changing factors make the 2023 housing market challenging to predict. Here's our forecast; it may surprise you.
To fight record inflation, the Federal Reserve steadily increased federal funds rates in 2022, leading mortgage rates to follow suit. Finance company Freddie Mac notes that the average rate on a 30-year fixed mortgage more than doubled to 6.49%. (The pandemic brought record-low interest rates to around 3%.)
Realtor.com predicts mortgage rate increases into early 2023, closing the year at 7.1%. We believe mortgage rates will continue to rise as the Federal Reserve continues to mediate the effects of inflation. There's good news — interest rates will likely level out and remain at around 7% on average. Remember, that's lower than the 7.76% average rate seen in 30-year mortgages since 1971.
This year's economic factors and spiking mortgage rates have effectively corrected the housing market boom we saw in 2020 and 2021. The market will likely continue to cool in 2023, and home prices may drop. The Case-Shiller National Home Price Index shows that home prices were down 2.2% between June and September of 2022, the first monthly home price decline since 2012.