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12/12/2022

NAR expects existing-home sales to fall nearly 7%

Home prices should hold steady in 2023 with the median cost rising just 0.3% as mortgage rates decline.
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Existing home sales
The NAR says half the nation could see slight home price declines in 2023.

The National Association of Realtors announced this afternoon that it forecasts existing-home sales will reach 4.78 million in 2023.

This marks a 6.8% decline compared to 2022 existing-home sales of 5.13 million. 

This latest forecast was delivered by NAR Chief Economist Lawrence Yun during the association’s fourth annual year-end Real Estate Forecast Summit.

Prices should remain stable in 2023, however. Yun expects the median home price to reach about $385,000, edging upward by just 0.3% compared to a median home price of $384,500 in 2022.

“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%.”

Yun expects rent prices to rise 5% in 2023, following a 7% increase in 2022. He predicts foreclosure rates will remain at historically low levels in 2023, comprising less than 1% of all mortgages.

Additionally, Yun forecasts the U.S. GDP will grow by 1.3%, roughly half the typical historical pace of 2.5%. 

After rising above 7% in late 2022, Yun predicts that the 30-year fixed mortgage rate to settle at 5.7% as the Fed slows the pace of rate hikes to control inflation. Yun also noted this is lower than the pre-pandemic historical rate of 8%.

Regarding real estate markets to watch in 2023, here are the top markets the NAR identified as metro areas that will be strong performers in 2023.

  1. Atlanta-Sandy Springs-Marietta, Ga.
  2. Raleigh, N.C.
  3. Dallas-Fort Worth-Arlington, Texas
  4. Fayetteville-Springdale-Rogers, Ark.-Mo.
  5. Greenville-Anderson-Mauldin, S.C.
  6. Charleston-North Charleston, S.C.
  7. Huntsville, Ala. 
  8. Jacksonville, Fla.
  9. San Antonio-New Braunfels, Texas
  10. Knoxville, Tenn.
Click here to read the NAR's "Markets to Watch in 2023 and Beyond" report.

The NAR has selected the top 10 real estate markets to watch in 2023 based on how they compared to the national average on the following economic indicators: 

  • Better housing affordability.
  • Greater numbers of renters who can afford to buy a median-priced home; 
  • Stronger job growth.
  • Faster growth of information industry jobs.
  • Higher shares of the information industry in the respective local GDPs.
  • Migration gains.
  • Shares of workers teleworking. 
  • Faster population growth. 
  • Faster growth of active housing inventory.
  • Smaller housing shortages.

“The demand for housing continues to outpace supply,” Yun said. “The economic conditions in place in the top 10 U.S. markets, all of which are located in the South, provide the support for home prices to climb by at least 5% in 2023.”

Last month, National Association of Home Builders NAHB) Chief Economist Robert Dietz said he expects housing starts to drop by double-digits in 2023.

Dietz told HBSDealer that he will provide more detailed figures at the 2023 NABH International Builders' Show scheduled for Jan. 31 through Feb. 2 in Las Vegas.

To view NAR’s On the Horizon: Markets to Watch in 2023 and Beyond report, click here.

The National Association of Realtorsis America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.

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