High mortgage rates pressured home buyers’ bottom lines this year and kept potential buyers on the sidelines. We don’t expect sales to pick up through 2023, but next year could bring some relief through weaker home values and lower interest rates.
The National Association of Realtors said through November, after 10 straight months, existing home sales continued to fall, after higher mortgage rates combined with still-high prices to keep some buyers on the sidelines. As for pending home sales, they also fell.
Compared to last year, existing homes in November sold at a seasonally adjusted annual rate of 4.09 million, the lowest number since the Covid-driven housing market pause in 2020.
During the penultimate month of last year, existing homes sold at a rate of 6.33 million, a level about 35% higher than the same month this year, reported WSJ Print Edition.
According to Redfin data, Deals are still a factor despite being less frequent than before covid. 40% of the offers in Redfin faced competition during the penultimate month of the year, well below the approximately two-thirds of the offers that had bid competition in November 2021
S&P CoreLogic Case-Shiller Home Price Indices released data showing prices fell in 20 of the country’s largest metropolitan areas in October.
The median sales price of existing homes fell 10.4% in November from its all-time high earlier this summer. Year-over-year, prices were 3.5% higher than a year ago, the slowest growth since June 2020.
Mortgage Bankers Association
Based on an average of recent forecasts from the National Association of Realtors, Fannie Mae, the National Association of Realtors, and the Mortgage Bankers Association, Freddie Mac. Total home sales in 2022 are expected to be approximately 5.8 million , a decrease of 16% compared to 2021,
According to the 4 institutions, on average sales are expected to drop an additional 13% in 2023, to a total of five million sales. Mortgage rates are only one part of the equation.
Doug Duncan, chief economist at Fannie Mae, said: “We expect housing to continue to slow, even though mortgage rates have come down recently.”
During the first quarter of 2023, rates are expected to be around 6.4% and 5.7% in the fourth quarter. Forecasters expect mortgage rates to recede throughout 2023, but rates will remain high relative to previous pandemic lows.
The projections are based on different indices or data points. For this reason, estimates of home values next year vary, yet most agree that prices in 2023 will stabilize or fall compared to 2022.
Zillow expects values to fall 0.7% nationally between November 2022 and November 2023, according to its most recent forecast. Values for 8 of the 10 largest metropolitan areas in the country are expected to be lower compared to November with only Atlanta and Miami expected to be higher by the end of November 2023.
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