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    Home Trends

    Mid-Year Home Price Predictions from the Experts

    Last week, the Fed announced that it would lift its pause on interest rate hikes, raising rates by 25 basis points (0.25%)....

    • Susana Murphy
    • July 31st, 2023
    • 5 min read

    Last week, the Fed announced that it would lift its pause on interest rate hikes, raising rates by 25 basis points (0.25%). The current rate is the highest it’s been since March 2001. This move is a further attempt at directing the economy toward a “soft landing,” or a gradual slowdown that curbs inflation while avoiding a full-blown recession. 

    Because homebuyer activity is tied to mortgage rates, this development could have a significant impact on the housing market in the United States. Buyers are still struggling with affordability, which drives demand down. That means home prices should come down too, right? Not quite—and the reason is low inventory.

    Sellers currently locked into a low interest rate don’t want to sell their homes only to face a higher rate on their new mortgage and high prices in their housing market. So although demand is lukewarm, it’s still greater than the supply of available houses.

    How will this affect home prices in the second half of 2023? Let’s check out updated predictions from the experts.

    U.S. Bank

    Citing the tug-of-war between demand and inventory, U.S. Bank believes that home values in the U.S. are stabilizing. After the skyrocketing values of 2020-2021 and a period of modest decline, “the U.S. housing market appears to be adjusting to higher mortgage rates” (“The impact of today’s higher interest rates on the housing market,” 26 July 2023). The bank holding company is optimistic about the uptick in new construction activity, but does not believe it will alleviate the housing shortage enough to significantly reduce home prices. Until affordability and inventory constraints loosen, the current market will hold.

    Bankrate

    Bankrate’s chief financial analyst Greg McBride predicts that the “housing market will be tepid in 2023, with only lukewarm demand and a limited amount of inventory available for sale” (Martin, 10 July 2023). In early July, McBride wrote that “mortgage rates could pull back meaningfully if inflation pressures ease” which would facilitate greater movement in the market. However, the Fed announced yet another rate hike just 16 days later, so the market will probably align more with Rick Sharga’s prediction that “borrowers will pursue fewer purchase loans and we will see a continuing decline in rate-based refinance activity.” That means because of the unaffordability, buyers will hold off on purchases.

    Fannie Mae

    On July 19th, Fannie Mae’s Economic and Strategic Research (ESR) Group published an updated prediction for the 2023 economy and housing market using data from the first half of the year. While they note that a “soft landing” has become more probable than they initially thought, they still predict a mild recession by the end of 2023 into the beginning of 2024. Home sales are down due to low inventory and high mortgage rates, and although new construction activity is growing, the housing shortage “shows no signs of easing” (“Inflation is Slowing, But Fully Quelling It Will Be Tough,” 19 July 2023). For that reason, 2023 home prices have been stronger than the ESR Group previously predicted—but with the forecast of a recession on the horizon, it's their expectation that home price growth will slow.

    Forbes

    Citing the same reasons, Forbes Advisor also predicts a lukewarm housing market for the rest of 2023. Rising mortgage rates keep affordability out of reach for many while encouraging homeowners to stay put rather than sell their homes. In addition, “Though the median existing-home sales price edged lower year-over-year for the fourth consecutive month—a promising sign for home shoppers—experts don’t expect substantial, nationwide price declines anytime soon” (Rothstein, Jennings, 20 July 2023). Instead, Forbes experts still predict a correction from the double-digit gains of the last several years over a full-scale market collapse or massive price deflation.

    CoreLogic

    CoreLogic predicts that home prices for the rest of 2023 will vary regionally, but will remain elevated overall. CoreLogic’s chief economist Selma Hepp stated that “2023 home buying activity may end up being the slowest in about a decade” (Hepp, 25 July 2023) due to high mortgage rates and low inventory. She explains that while home prices performed better than expected in early 2023, “monthly gains are likely to plateau to historical averages as mortgage rates continue to impact affordability in many markets."

    The bottom line

    While economy and housing market experts don’t unanimously agree about whether the U.S. will enter a soft landing or a recession, most concur that home prices are relatively stable due to high mortgage rates and low inventory. Some are predicting a growth slowdown, while others forecast a plateau in prices or a mild decline. What does that mean for you?

    If you’re trying to buy, make sure you shop around for a mortgage to get the best rate. Doing so can save you over $5,000!

    If you’re thinking of selling, get in touch with an expert real estate agent in your area. You want someone by your side who knows how to skillfully navigate and sell your home for top dollar under any market conditions.

    Unsure about your next moves?

    Get in touch today. We’re happy to discuss your unique housing situation and answer your questions—from the simplest inquiry to the most complex. Reach out and your market worries to rest.

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    Author Photo
    About the author

    Susana Murphy

    508-345-5632
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    I'm Susana Murphy, and I founded ALANTE with a clear vision and a passion for redefining what real estate should be. Let me share with you why ALANTE exists, what we stand for, and what we aim to offer both our valued clients and our dedicated agents. ALANTE Real Estate wasn't just a business venture for me—it was a calling born out of a deep-seated belief in doing things differently, and doing them better. Having been in the real estate industry since 2005 myself as a top producing Realtor, I saw firsthand the immense potential for innovation and improvement. I recognized that traditional practices were falling short in meeting the evolving needs of clients and agents alike. My vision for ALANTE was simple yet profound: to elevate the real estate experience by combining cutting-edge technology combined with story driven marketing and timeless values. In an industry often defined by transactions, I wanted to focus on service. I wanted to create a space where clients felt heard, valued, and supported every step of the way, and where agents could thrive in an environment that prioritizes collaboration, growth, support and integrity. At ALANTE, we believe in offering our clients more than just transactions—we offer them transformative experiences. We understand that buying or selling a home is not just a financial decision; it's an emotional journey filled with dreams, aspirations, and life-changing moments. That's why we approach each interaction with empathy, expertise, and a genuine desire to exceed expectations. For our agents, ALANTE is more than just a brokerage—it's a community of like-minded professionals committed to excellence. We provide our agents with the tools, training, and support they need to succeed, all while fostering a culture of mutual respect, collaboration, and continuous learning. We believe that empowered agents create exceptional experiences for our clients, and that belief is at the core of everything we do. In an industry that's constantly evolving, we remain steadfast in our commitment to innovation and adaptability. We embrace technology not as a replacement for human connection, but as a catalyst for enhancing it. From advanced marketing strategies to streamlined processes, we leverage technology to enhance efficiency, transparency, and results. We don't just meet industry standards—we set new ones. We believe in raising the bar and redefining what it means to be a leader in real estate. Our dedication to excellence, integrity, and client satisfaction sets us apart, and it's what drives us to continually push boundaries and exceed expectations. So, whether you're a client looking for a personalized, unparalleled real estate experience or an agent seeking a supportive, forward-thinking brokerage, we invite you to join us on this extraordinary journey. Together, we're not just reimagining real estate—we're elevating it to new heights. Welcome to ALANTE Real Estate, where your vision meets our passion.

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