The housing market in 2023 continues to look better for home buyers who have been waiting to get back in the game due to the rate volatility last year. According to many experts, this could be the year of relief and opportunities for those looking to purchase a home.
Gone are the days of fierce competition and sky-high prices, as the market cools and prices settle down. Sellers may not see multiple offers on their properties anymore, and prices are starting to come down in certain areas.
The National Association of Realtors® predicts that the number of homes sold in the coming year will decline by 6.8%, with a median price around $385,000. Although prices may not return to pre-pandemic levels quickly, it is an encouraging sign for buyers.
The market is now more balanced between buyers and sellers, and the National Association of Realtors® predicts that demand for housing in Atlanta will continue to outpace supply while prices could climb 5% or more.
Strong job growth, population growth, and a high number of renters who can afford to buy a home are factors that contribute to this optimistic outlook.
Interest rates are typically the primary driver for buyer decisions. The current rate average this week is 6.33%, down slightly from the fall ranges but up considerably from the 3.45% early last year.
Where will rates settle in 2023?
To put it simply, when inflation increases, so do mortgage rates, which has contributed to the uptick since early 2022. Additionally, the Federal Reserve ending its program for purchasing mortgage-backed securities (MBS), known as Quantitative Easing (QE), also contributed to the rise in rates from below 3% to around 7% currently.
The Consumer Price Index (CPI) report for December confirmed that inflation is decreasing in most of the U.S. economy. This data supports the idea that the Federal Reserve’s recent interest rate increases have had a positive effect on controlling inflation, which has been steadily decreasing.
In June, the year-over-year CPI inflation reached a 40-year high of 9.1%, but it has been decreasing for the past six months. So, if inflation decreases to normal levels, it is likely that mortgage rates will do the same.