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wsj OP t1_j6yeg1g wrote

Reply to comment by curious_newb_22015 in We are real estate and housing economists Danielle Hale and George Ratiu and housing reporter Nicole Friedman, discussing affordability within the U.S. real estate market. Ask us anything! by wsj

You're right about the variety of predictions. Ours are on the stronger end for 2023. The full 2023 housing forecast and economic forecast are linked, but I'll summarize some key takeaways.

  1. We expect inflation to slow, but not return to its target which means that the Fed keeps rates higher for most of the year.

  2. This keeps upward pressure on mortgage rates (though admittedly, we've seen more weakness in rates for 2023 than we initially expected).

  3. Because mortgage rates and home prices remain relatively high, sales decline. Our expectation is that sales for 2023 will be down 14%, which would actually put them slightly above the pace we've seen in recent months.

  4. Slowing home sales will help curtail price growth, but we expect to see home sellers pull back from the market in 2023, which will keep home prices from adjusting quickly, and we expect them to grow in 2023.

The 2023 housing market is not going to be as strong as we've seen over the past few years from either a sales or price growth perspective, but I do think it will surprise those expecting a crash.

-Danielle

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