Welcome to the Housing Market Forecast for April 2023, where we'll try to make economics as entertaining as possible. As we move into spring homebuying season, we're all wondering what the heck is going on with the housing market. Is it up? Is it down? Is it sideways?
Well, the economy is doing its best impression of a drunk person stumbling around, with high inflation, steep interest rates, geopolitical uncertainties, and recession fears, among other things, pulling it in all directions. But, hey, some promising trends are developing, so let's dive in!
First off, the median existing-home sales price was down 0.2% to $363,000 in February compared to a year ago, according to the National Association of Realtors (NAR). Woohoo, it's about time! This ends a record streak of 131 consecutive months of year-over-year increases. Finally, some good news for homebuyers!
Total existing-home sales also jumped 14.5% from January to February, ending a run of 12 consecutive months of declining sales. However, they were still down 22.6% from a year ago, per NAR. So, not quite out of the woods yet, but progress is progress.
Housing starts also rose 9.8% in February, providing much-needed inventory. Mortgage rates have ticked down in recent weeks, falling to 6.32% for the week ending March 30, according to Freddie Mac. Hey, a little progress is better than none, right?
But let's not get too excited just yet. According to Robert Frick, corporate economist at Navy Federal Credit Union, "Prices need to drop more, and across more markets, before a general revival can occur." So, don't go spending all your savings just yet.
The housing inventory outlook for April 2023 is, well, not great. Low housing inventory has been a challenge since the 2008 housing crash when the construction of new homes plummeted. It hasn't fully recovered, and it won't in 2023. At the current sales pace, unsold inventory is at a 2.6-month supply, according to NAR, which is low by historical standards, though up from 1.7 months a year ago. "Inventory levels are still at historic lows," said Lawrence Yun, chief economist at NAR. "Consequently, multiple offers are returning on a good number of properties." So, if you're a buyer, you'll still need some luck and a great agent!
At least there's some good news on the housing starts forecast for 2023. Following five consecutive months of declines, single-family construction starts in February rose 9.8%, and applications for building permits increased by 13.8% from the previous month, according to the U.S. Census Bureau and HUD. The most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, rose two points, from 42 to 44. This is the third month-over-month increase following 12 consecutive months of declines. We'll take any win we can get at this point.
So, will the housing market crash? Probably not. 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. "Home prices will be steady in most parts of the country with a minor change in the national median home price," said Yun. Phew, crisis averted... for now.
But if you're still worried, there are a few tips for buying and selling in today's housing market.
For buyers, be flexible and consider moving to lower-priced housing markets if your desired area is out of reach. Review your financial situation, gather required documents, shop multiple lenders, and strengthen your credit score before jumping in. And don't try to predict the market too much. Experts suggest buying a home based on your budget and needs. If you find a home you love in an area you love, and it fits your budget, then go for it. But if you make too many sacrifices just to get a house, you may end up with buyer's remorse.
For sellers, find a listing agent who knows the area and knows how to market your home properly! Price your home competitively while fielding questions and offers from prospective buyers. Present your home in the best possible light, even if it's outdated. Declutter, organize and clean to give buyers a chance to envision the house's potential.
So, there you have it, folks. The Housing Market Forecast for April 2023. It's not all sunshine and rainbows, but hey, progress is progress, and we'll take it. Happy buying and selling!