Home sales may fall in 2023. These cities may see the biggest declines.

Home sellers should brace themselves for a tough year, with one real estate group predicting that property sales could fall in 2023 as more buyers turn away due to rising mortgage rates and unaffordable home prices.

According to Realtor.com’s 2023 Housing Forecast, the number of homes sold will fall 14.1% to 4.53 million homes, the lowest since 2012, when the U.S. is still recovering from the housing crash and Great Recession. represents property transactions.

The pandemic has led to a massive surge in real estate sales, fueled by a combination of record low mortgage rates and many employers’ work-from-home orders. Home prices have risen almost 40% since the start of 2020, and mortgage rates have more than doubled since the start of the year, putting many buyers out of the market.

According to a new forecast from Realtor.com, sellers may feel the brunt of this impact next year.

“High home prices and mortgage rates [will] Limit the pool of eligible homebuyers in 2023,” he said.

Home sales are expected to fall the most in California and Florida. According to Realtor.com’s forecast, the biggest declines in sales volume will be in these cities:

  • Ventura, California: -29.1% decrease
  • San Jose, California: -28.8%
  • Bradenton, Florida: -28.7%
  • San Diego, California: -27.3%
  • Palm Bay, Florida: -18.3%
  • Los Angeles, California: -15.8%
  • Tampa, Florida: -15.6%
  • Tucson, Arizona: -14.7%
  • Fresno, California: -13.7%
  • San Francisco: -13.3%

A possible bright side for sellers

If there’s a bright side for sellers, it’s that the median sales price in the nation’s top 100 markets is expected to increase an average of 5.4% next year, according to Realtor.com’s 2023 Housing Forecast.

Not everyone’s outlook for home prices in 2023 is so sunny. Some economists do predict Real estate values ​​could drop as much as 20% next year due to rising mortgage rates and economic uncertainty.

Although Realtor.com predicts higher housing prices next year, the pace of escalation is slower than the increases of the past two years. Danielle Hale, chief economist at Realtor.com, told CBS MoneyWatch that prices will rise in the first half of 2023 but fall or remain flat in the second half of next year.

“For the year as a whole, we expect 2023 to be higher,” Hale said. “Buyers who want to buy may have to wait a little longer.”

Realtor.com predicts that rising prices will be more dramatic in some cities than others. Metro areas that could see the sharpest increases include:

  • Worcester, Massachusetts: 10.6%
  • Portland, Maine: 10.3%
  • Grand Rapids, Michigan: 10%
  • Providence, Rhode Island: 9.8%
  • Spokane, Washington: 9.6%
  • Springfield, Massachusetts: 8.9%
  • Boise, Idaho: 8.7%
  • Chattanooga, Tennessee: 8.2%
  • Indianapolis, Indiana: 7.8%
  • Milwaukee, Wisconsin: 7.7%

These higher prices may discourage buyers who are faced with sharply higher real estate valuations in 2022. Some cities in particular – like Boise, Idaho; and Austin, Texas — saw double-digit percentage growth this year.

The rising cost of home ownership has deterred many would-be buyers from continuing to rent. In a recent LendingTree survey, nearly half of respondents said they’ve put off major decisions by either renting longer or putting off major renovations.

At the end of 2022, home prices in some areas fell, but mortgage rates continued to rise. The average interest rate for a 30-year fixed mortgage was about 6.6% this week, more than double the rate at the beginning of the year.

Realtor.com expects mortgage rates to rise further early next year as the Federal Reserve continues to raise the key interest rate. Mortgage rates could reach 7.4% in the first half of 2023 and fall to around 7.1% towards the second half of the year.

Realtor.com predicts that the combination of higher home prices and mortgage rates in 2023 could push the typical monthly mortgage payment up to $2,430 in 2023, or 28% more than this year.

High mortgage rates depress home sales


Mortgage rates have risen so fast this year that it’s sometimes been difficult for buyers to figure out how much home they can afford, Hale said. Interest rates probably won’t change much in 2023, he said.

“Having more stability will make it easier for buyers to set the right budget,” he said. “And that should encourage people to get back into the housing market.”

With buyers sitting on the sidelines, the number of homes for sale is expected to increase by about 23% next year. The advantage for buyers is more choice, while sellers will face more competition.

To be sure, all of those projections are subject to change depending on how the Fed handles the fight against inflation next month and early next year, Hale said. There is a Fed increased the benchmark rate Six times this year, and with each increase, mortgage rates have risen. Hale and other economists expect the Fed to raise interest rates again next month, but perhaps not by as much as previous hikes.

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