This year has been a tough one for the housing market, with home sales falling for most of the year.
And next year may not be much better, whether you’re looking to buy or sell a home, according to Realtor.com.
“After being overwhelmed in the housing frenzy of the recent past, homeowners, sellers, buyers, and renters may be underwhelmed in 2023,” Danielle Hale, Realtor.com’s chief economist, wrote in a commentary.
“The slowdown in home-sales transactions that began as mortgage rates surged in 2022 is expected to continue, leading to a moderation in home-price growth and tipping housing-market balance away from sellers.”
Existing-Home Sales Dropped in November
Existing-home sales dropped 7.7% in November from October, marking the 10th straight monthly decline, according to the National Association of Realtors. November sales were down 35.4% from a year earlier.
The median existing-home price slid 2.2% to $370,700 in November from October. That was up 3.5% from a year earlier. The price peaked at a record of $413,800 in June.
The 30-year fixed mortgage rate averaged 6.27% in the week ended Dec. 22, more than double the 3.02% rate of a year earlier, according to Freddie Mac.
This obviously hasn’t been good news for home buyers, and they can’t expect much relief next year, Hale said.
“With mortgage rates continuing to climb as the Fed navigates the economy to a softish landing, a moderation in home-price growth will not be enough for the housing market to be a buyer’s bonanza,” she said.
The Federal Reserve has raised interest rates by 4.25 percentage points since March, and many experts expect it to go another 0.75 percentage point early next year.
High Housing Costs Are a Deterrence
To be sure, “home shoppers will enjoy advantages such as a growing number of homes for sale,” Hale said. “But costs will remain high, challenging affordability at a time when overall budgets continue to be squeezed.”
Home inventories totaled 1.14 million units at the end of November, up 2.7% from a year earlier, according to the NAR. Unsold inventory stood at a 3.3-month supply on Nov. 30 at the current sales pace, unchanged from October but up from 2.1 months in November 2021.
So both buyers and sellers are in a bit of a pickle, Hale said.
“If home shoppers and sellers have unrealistic expectations, they could find themselves in a stalemate in the year ahead,” she said.
“The 2023 housing market could become a nobody’s-market, not friendly to buyers or to sellers. Consumers who are ready for the challenge will need up-to-date information on market conditions, creativity and flexibility to adjust, and a healthy dose of patience in order to create success.”
