As 2022 draws to a close, you might be wondering what will happen with the housing market in 2023, especially if you're considering purchasing a home. To make the best decision possible, have a look at the most recent expert forecasts for both home prices and mortgage rates.
The Inflation Will Continue to Influence Mortgage Rates
Mortgage rates have increased dramatically this year as the Feds adopt strong measures to control inflation. The hikes we've seen have been quick and abrupt; at the end of last month, the average 30-year fixed mortgage rate crossed the 7% mark. In fact, this is the highest they've risen in more than 20 years.
In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been: “Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”
It's difficult to predict with accuracy where mortgage rates will go from here because we're in uncharted terrain. Although predicting mortgage rates for the future is far from an exact science, experts do concur that rates will continue to be tied to inflation in the future. Mortgage rates will probably increase if inflation remains high.
Price Changes Vary Depending on the Market
Home prices have started to decline this year in several cities as buyer demand has decreased in reaction to higher mortgage rates. Expert predictions regarding home prices for the upcoming year are inconsistent. However, most experts agree that local market conditions will influence how much housing prices will increase or decrease. According to First American's Chief Economist Mark Fleming: “House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”
In essence, some places might still experience modest price growth while others might experience modest price declines. Everything is dependent on other elements operating in that regional market, such as the balance of supply and demand.
If you want to know what’s happening with home prices or mortgage rates, reach out to Laura Larson now for the latest on what experts are saying and what that means for your local area.