The housing market is an ever-evolving and dynamic sector that affects the economy and the lives of people worldwide. As we move through 2023, the latest housing market news is of utmost importance to individuals and businesses alike. Whether you are a homebuyer, seller, investor, or simply interested in real estate trends, staying up-to-date with the latest developments can help you make informed decisions. In this post, we will explore the current state of the housing market and the latest news that could impact its future. Read on to learn about the key trends, challenges, and opportunities in the housing market in 2023.
Latest Housing Market News in 2023
The US housing market experiences its biggest drop in value since 2008, with home prices declining by $2.3 trillion or 4.9% from June 2022 to the end of the year (Redfin).
The housing market experienced a surge during the pandemic, with homebuyers flocking to the suburbs, but it came to a halt with the Federal Reserve’s aggressive interest-rate hike campaign (Redfin).
Mortgage rates have recently started to increase amid interest rate-hike fears, with the average rate for a 30-year fixed mortgage climbing to 6.5% this week, compared to 3.92% one year ago (Freddie Mac via Redfin).
Homebuyer demand has decreased due to higher mortgage rates, leading to a median home price of $383,249 in January, down 11.5% from a peak of $433,133 in May 2022 (Redfin).
Despite the drop in value, the total value of US homes remains roughly $13 trillion higher than in February 2020, before the pandemic shut down the global economy (Redfin).
2023 could see the largest housing correction since post-WWII, with experts predicting a 10% to 15% drop in housing prices by the second or third quarter. (Fortune)
U.S. home construction fell for the third consecutive month in November, and single-family housing starts fell by 4.1% in the fall of 2022, according to a Commerce Department report. (Reuters)
YieldStreet and Home Partners of America have reduced their home-buying levels, with YieldStreet reducing levels by 90%. (Fortune)
Despite the fall in housing prices, the supply of homes is still “relatively low” with a 3.3-month supply on the market, according to Macro Trends Advisors. (Fox Business)
Even a 20% drop in housing prices through 2023 would not put home prices back at their pre-pandemic level. (Fox Business)
Experts predict a housing market crash is unlikely based on current market conditions as there has been a decline in transactions but not a significant decline as seen in the housing market crash of 2008-2009. (Redfin)
The housing market has seen a period of decline in some markets and growth in others. (Redfin)
Rapid market value growth accurately describes the housing market up until about midway through 2022, but signs of a growing housing bubble may be waning now. (Redfin)
Month-over-month prices have declined since the summer of 2022 and home prices are still up year over year as of January, but the increase was just 1.5% higher than in January 2022. (Redfin)
The second half of last year was a very soft phase for homebuying demand, it kind of seemed like homebuyers reached a breaking point right in early summer thanks to affordability challenges. (Zillow)
The supply of houses on the market remains low as homebuilders back off plans for major development, and current homeowners still don’t appear eager to sell. (Zillow)
The more volatile mortgage interest rates may see some buyers backing off the market again if they continue upward, and a lack of demand will ultimately lead to declining year-over-year home prices. (Zillow)
Even with the year-over-year increase in pending deals, based on Zillow data, existing homeowners don’t appear willing to sell their homes yet. (Zillow)
Markets that experienced faster home price growth in recent years are more likely to see bigger dips as prices correct to fit with long-term demand. (EasyKnock)
Newly pending contracts to buy a home in the U.S. fell from 58,000 to 55,000 during the week ending Feb. 17, according to Altos Research.
Mortgage rates have rebounded after a brief brush with 6% earlier this month, which has pushed many homebuyers back to the sidelines, especially rate-sensitive first-time buyers.
Higher mortgage rates have made homes less affordable, causing a decline in purchase applications by 18% in the week ending Feb. 17, according to the Mortgage Bankers Association survey.
The volume of purchase applications for a mortgage is 41% lower compared to a year ago.
The difference between a 3% and 6% mortgage has added hundreds of dollars to a typical mortgage payment, causing buyers to be reluctant to return to the market.
According to Realtor.com, at last week’s rate of 6.32%, the buyer of a median-priced home was looking at a $1,985 monthly mortgage payment, up 42% from last year.
As of Feb. 17, there were 23% fewer single-family homes in the contract pending stage compared to last year, when there were 395,000 under contract.
If mortgage rates jump over 7%, pending home sales could start falling again like last year, according to Mike Simonsen, president and founder of Altos Research.
Housing market sees rise in sales to absentee owners in major metro areas, muscling out first-time homebuyers (NBC News)
The share of homes sold to absentee owners increased in 228 out of 307 ZIP codes across nine major metropolitan areas, remaining higher than pre-pandemic levels through December 2022 (NBC News)
Cash offers on homes are typically made by wealthy, seasoned buyers and investors, comprising a significant portion of absentee buyers (NBC News)
Increased absentee buying has led to deep inventory shortages, propping up prices and keeping competition tight in the market (NBC News)
The larger share of cash sales in major metro areas went to absentee owners compared to owner-occupied sales (NBC News)
Entry-level priced areas experienced the greatest increase in absentee buying, with the greatest increases occurring in San Antonio (NBC News)
The disappearance of $200,000-$300,000 category homes is increasing the pressure on aspiring homeowners (NBC News)
Increased mortgage rates have slowed the market, providing a window for buyers who already have the cash to make purchases (NBC News)
Buying a home is no longer a priority for some as it has become a cutthroat market (NBC News)
Homebuyer affordability declined in January, with the national median payment increasing 2.3 percent to $1,964 (Mortgage Bankers Association).
Despite interest rates falling by 16 basis points from December 2022 to January, the increase in the median purchase application amount, which inched up $12,000 to $312,000, caused the decline in homebuyer affordability (Mortgage Bankers Association).
MBA expects the combination of economic uncertainty, high mortgage rates, and persisting affordability challenges to impact purchase demand, especially at the lower end of the market where supply is still tight (Mortgage Bankers Association).
The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased to $2,379 in January compared to $2,399 in December 2022 (Mortgage Bankers Association).
MBA’s national mortgage payment to rent ratio (MPRR) decreased from 1.50 at the end of the third quarter (September 2022) to 1.45 at the end of the fourth quarter (December 2022), meaning mortgage payments for home purchases have decreased relative to rents (Mortgage Bankers Association).
The national median asking rent in the fourth quarter of 2022 decreased by 0.9 percent every quarter to $1,322 ($1,334 in the third quarter of 2022) (Mortgage Bankers Association).
The top five states with the highest PAPI were: Nevada, Idaho, Utah, Arizona, and Florida (Mortgage Bankers Association).
The top five states with the lowest PAPI were: Washington, D.C., North Dakota, Connecticut, Arkansas, and West Virginia (Mortgage Bankers Association).
Homebuyer affordability decreased for Black, Hispanic, and White households, with the national PAPI increasing from 159.5 in December to 160.9 in January for Black households, from 152.5 in December to 153.8 in January for Hispanic households, and from 160.6 in December to 162.0 in January for White households (Mortgage Bankers Association).
The latest housing market news indicates that there could be a significant correction in the housing market in 2023. This may create opportunities for those looking to buy a home, but could also pose challenges for current homeowners and the overall economy. Despite the drop in housing prices, the supply of homes remains relatively low, indicating that demand may remain strong during the peak home-buying season.
Stay tuned for more updates on the housing market as we continue to monitor the situation. If you’re looking for real estate investment avenues in 2023, get in touch with us for expert advice and guidance. Our team of professionals can help you navigate the changing market and find the right opportunities for your needs. Don’t wait, contact us today to learn more!
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Sources:
https://www.foxbusiness.com/economy/us-housing-market-sees-drop-value-biggest-2008
https://finance.yahoo.com/news/new-home-buyers-are-backing-out-of-deals-why-185403276.html
https://realestate.usnews.com/real-estate/articles/when-will-the-housing-market-crash
https://www.nbcnews.com/data-graphics/absentee-homeowners-crowding-housing-market-data-rcna69828
https://www.mba.org/news-and-research/newsroom/news/2023/02/23/mortgage-application-payments-increased-2.3-percent-to-1-964-in-january
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