What to Expect From the Housing Market in 2023 – Barron’s

Lower mortgage rates and flat or lower home prices could help transactions in 2023. Jim Watson/AFP via Getty Images

Higher mortgage rates put pressure on home buyers’ bottom lines in 2022, and kept some potential sellers on the sidelines. The new year could bring some relief through lower rates and weaker home prices—but don’t expect a surge in sales.

Existing-home sales in November slumped for the 10th month in a row, according to National Association of Realtors, as higher mortgage rates combined with still-high prices to keep some buyers on the sidelines. Pending home sales, a measure of contract signings that precedes the closing of a home sale, also fell, according to the trade group.

The data stands in contrast to the housing frenzy at this time last year. Previously-owned homes in November were sold at a seasonally-adjusted annual rate of 4.09 million—the lowest figure since the Covid-driven housing market pause in early 2020.

Comparing the most recent month’s home sales to the same month last year illustrates the scope of the turnaround. In November 2021, existing-homes were sold at a rate of 6.33 million—a level roughly 35% higher than the same month this year.

Bidding wars, though still a factor, are less prevalent than earlier in the pandemic, Redfin data show. Roughly 40% of Redfin offers faced competition in November, the brokerage said last week—well below the roughly two-thirds of offers that experienced bidding wars in November 2021. 

Home prices, too, have lost steam. S&P CoreLogic Case-Shiller Home Price Indices data released earlier this week shows that prices fell in 20 of the nation’s largest metropolitan areas in

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