Despite the higher mortgage rates, home prices are still above what they were one year ago, he adds. Although he predicts that sales will be at a low point next year, with only 5.3 million units sold, he foresees a gradual increase afterwards, up to an annual six million units by 2027. While it’s been showing bubble-like properties, Yun does not expect the residential real estate market to violently pop. This rate of appreciation, he said, is consistent with the long-term average of home prices increasing by a rate that’ hovers a percentage point above the inflation rate. He predicts home prices will average low- to mid-single-digit annual appreciation over the next five years. The only exception is California, he said, where the market could see 10% declines: “Because it’s so expensive, California is always the most vulnerable to changes in interest rates.” Overall, in five years, he expects prices to have appreciated a total of 15-25%. Yun foresees zero or minor changes in purchase price tags on a nationwide basis next year, with increases or decreases of about 5%. “It provides the certainty borrowers want, lenders can sell them to investors, and there is a vibrant secondary market of global investors eager to buy them,” he said. Greg McBride, CFA, Bankrate chief financial analyst, agrees, stating that the 30-year fixed rate mortgage will remain the dominant product. However, after that, he predicts 90% of Americans will return to the traditional 30-year fixed mortgage route. Nanayakkara-Skillington agrees, predicting rates will drop to about 6% by the middle of 2024.īecause the rates are high, Yun foresees a greater interest in adjustable-rate mortgages, known as ARMs, through next year. Within two years, the rate should return to five-and-a-half or 6%, he added. Mortgage interest rates could continue to increase for a few weeks or months, said Yun, adding that 7% looks to be the level for the rest of this year and most of next year. The forecast for mortgage rates and types New home starts: According to Nanayakkara-Skillington, the seasonally adjusted annual rate for new single family home starts is 892,000, which is down 18.5% compared to last year. Thirty-year mortgage rates: According to Freddie Mac, the current average 30-year fixed mortgage rate was 7.08%, the highest it’s been in 20 years. Census Bureau and the Department of Housing and Urban Development. Meanwhile, sales of new single family houses in July 2022 were at a seasonally adjusted annual rate of 511,000 – which is 29.6% lower than in July 2021, said the U.S. According to the September NAR data, during 2022, the seasonally adjusted total figure dropped from 6.49 million in January to 4.71 million in September. Homes sold: Fewer existing homes are selling nationwide. In a more typical market, it’s 45 days, said Yun. In September 2022, the median number of days on the market for sold homes ranged from 13-23, depending on the price, according to the September NAR data. The inventory of unsold existing homes was at a 3.2-month supply in September 2022.ĭays on the market: With inventory still tight, homes continue to sell quickly. Inventory: Though higher than it was in January 2022, the supply of homes remains historically low, said NAR Chief Economist and Senior Vice President of Research Lawrence Yun. For new homes, the current average sales price nationwide is $470,600 – up around 14% from a year ago, said Danushka Nanayakkara-Skillington, assistant vice president, forecasting and analysis for the National Association of Homebuilders, or NAHB. Home sales price: The median existing-home sales price rose 8.4% from one year ago, to $384,800, according to September 2022 data from the National Association of Realtors, or NAR. The current housing marketīut first, a snapshot of the residential real estate scene, as of autumn 2022.

We asked several residential real estate experts to peer into their crystal balls and give us a five-year forecast of the housing market. But what about farther out? After all, buying a home often requires long-term planning. There are plenty of predictions about where the housing market is going in 2023. Yet, with inventory still low, home price tags remain high in many parts of the U.S. After a red-hot market characterized by bidding wars, low interest rates and elevated prices, mortgage rates increased to the highest level in 20 years, leading to a slowdown of both buying activity and purchase prices. It’s been a wild real estate ride over the last few years.

Washington state new home inventory