2023 Forecast: US Home Price Decline
As the Federal Reserve keeps raising interest rates, Jeff Taylor, a board member of the Mortgage Bankers Association, predicts that US home values might decline by as much as 9% this year. Taylor forecasts a second year of falling home values despite a recent decline in 30-year mortgage rates.
Housing Market Trading Volumes Will Decline
Taylor predicts that trade volumes in the housing market will decline and hit 40-year lows. Despite the decline in mortgage rates, market contraction is being brought on by uncertainties over inflation and interest rates. It is anticipated that the market would grow to a value of $1.5 to $1.6 trillion.
Fed’s Monetary Policy’s Effect on Home Buyers and Sellers
Mortgage rates have remained high over the past year as a result of the Federal Reserve’s aggressive monetary policy, which includes rate rises. Investors are growing confident that the central bank may soften its stance as consumer price pressures lessen.
Taylor says that homebuyers and sellers shouldn’t be deterred from closing transactions despite the probable consequences of the Fed’s monetary policies. Instead, buyers should make aggressive offers and take advantage of the uncertainty, while sellers shouldn’t lower their asking prices in order to close a transaction.
Although the committed buyers and sellers are anticipating clarification in the first half of the year, the uncertainty has resulted in a market freeze and a paucity of transactions in the first quarter.