HUD Articles

Housing Market Predictions For 2023: When Will Home Prices Become Affordable?

Robin Rothstein

Forbes Advisor Staff

Rachel Witkowski

Editor

Housing Market Forecast for February 2023

As we begin to move through 2023, housing experts maintain a watchful eye on the economy, which continues to be pulled in all directions by high inflation, steep interest rates, ongoing geopolitical uncertainties and recession fears, to name a few.

Nevertheless, there are indicators that a housing market correction is underway. For one, mortgage rates are showing signs of ease, with rates now less than double what they were a year ago.

And after a couple of years of a meteoric rise, home prices seem to be coming down to Earth, albeit slowly, making it difficult for many homebuyers to access affordable housing.

The median existing-home sales price was up 2.3% to $366,900 in December compared to a year ago, according to the National Association of Realtors (NAR). Though this is the 130th consecutive month of YOY price increases—a record streak—the YOY increase was at a slower pace compared to November. Month-over-month existing-home sales prices continued their downward trend and are roughly 11% lower than their record high of $413,800 in June.

At the same time, total existing-home sales dropped 1.5% from November to December, marking the eleventh consecutive month of declining sales, and down 34% from a year ago, per NAR.

Despite all these mixed messages, some experts say that home shoppers have reason to be hopeful in 2023.

“Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year,” said Lawrence Yun, chief economist at NAR.

Others expect increased sales activity as home shoppers trickle back this year, eventually leading to a full-on housing market resurgence.

“It seems we have already reached the bottom of the low home sales activity,” says Nadia Evangelou, senior economist and director of forecasting for the NAR. “And with mortgage rates stabilizing near 6%, we expect the housing market to turn around in 2023 … and rebound in 2024.”