Could there be a real estate housing market recovery in progress
As more buyers entered the real estate housing market in March, mortgage rates ended the month over 30 basis points lower than they had begun. For the first time in over 11 years, home selling prices also decreased year over year in February, and total home sales experienced their greatest monthly percentage gain since July 2020. Many analysts are divided, though, as to how much further home values will fall this year.
One is that there is still a shortage of homes in the country. People who bought homes recently at historically low interest rates are continuing to live in them. The difficulty of affordability for many people, especially first-time homeowners, is perpetuated in part by tight inventory constraints that prevent prices from declining.
While home prices continue to rise year over year, they are not as startling as they were in the beginning of 2022. However, the direction that mortgage rates take will probably determine how much further home prices fall in 2023.
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Forecast for the real estate housing market for may 2023
real estate housing market experts keep a close eye on the economy as we enter the spring homebuying season since it is still being pushed in many different directions by factors like rising inflation, high interest rates, persistent geopolitical uncertainty, and recession concerns, to mention a few.
Nevertheless, some encouraging trends are emerging. According to the National Association of Realtors (NAR), the median price of an existing home sold in February decreased by 0.2% to $363,000 from the same month last year. This brings to an end a record-breaking run of 131 straight months of year-over-year gains. Despite a 14.5% increase from January to February in total existing-home sales, which ended a 12-month streak of declining sales, those sales were still down 22.6% from a year ago, according to NAR.
According to preliminary data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD), housing starts increased 9.8% in February as well, contributing to the creation of much-needed inventory. In the meantime, mortgage rates are still fluctuating. After reaching a year-to-date peak in early March, rates dipped for five straight weeks before beginning to rise again.
Recent rate reductions appear to be enticing at least some shoppers off the sidelines despite the most recent rise. And even though the growth of home prices is slowing and the number of sales is rising, some industry experts are still cautiously optimistic that the housing market is recovering.
Before there can be a general resurgence, prices need to fall further and in more markets, according to Robert Frick, corporate economist of Navy Federal Credit Union.
may 2023 real estate housing market Inventory Outlook
Since the housing meltdown of 2008, when the number of new homes being built fell dramatically, there has been a problem with low housing inventory. In 2023, it won’t have fully recovered because it hasn’t.
In contrast to earlier downturns, the real estate housing market supply has remained stuck at close to historic lows, supporting demand and maintaining higher home prices.
According to Sam Khater, chief economist at Freddie Mac, “[D]eclining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for potential buyers.”
According to NAR, unsold inventory has a 2.6-month supply at the current sales pace, which is a low supply by historical standards but an increase from 1.7 months a year ago.
According to a report by Lawrence Yun, chief economist at NAR, “Inventory levels are still at historic lows.” As a result, a lot of houses are receiving several offers.
Industry analysts have a pessimistic assessment on when inventory will eventually normalise based on this and other data.
According to Rick Sharga, executive vice president of market intelligence at ATTOM Data, “I believe that we’re likely to see low inventory continue to vexe the housing market throughout 2023.” Sharga claims that it’s unlikely that interest rates will increase because 70% of households have mortgages with rates of 4% or less.
The housing market: Will it collapse ?
Many economists predict the housing market is more likely to correct itself from the double-digit percentage jumps seen in home prices the past few years rather than crash, in part because the persistent inventory issue keeps home prices elevated.
According to Yun, “[H]ome prices will remain stable in the majority of the nation with only a slight change in the national median home price.”
However, some experts who follow the real estate housing market predict that some areas may experience an increase in home sales and prices, particularly in places where home prices have remained reasonable over the past few years when compared to the median income.