National Real Estate Market Update for 2023

We're past the halfway point of 2023. Here's how the national real estate market is tracking and what the rest of the year may hold.

We’re past the halfway point of 2023. Here’s how the national real estate market is tracking and what the rest of the year may hold.

The Inventory Problem Persists

Despite predictions of a flood of new listings, inventory remains near historic lows. The culprit: rate lock. Approximately 90% of current mortgage holders have rates below 6%. With today’s rates above 6.5%, moving means dramatically increasing their monthly payment — and most are choosing to stay put.

Prices Have Held Up Surprisingly Well

Given the rate environment, many expected prices to fall sharply. Instead, limited inventory has supported prices in most markets. Year-over-year, national home prices are essentially flat — which is a significant deceleration from 2021’s 18%+ gains, but far from the crash some predicted.

New Construction Is Picking Up

Builders have stepped into the gap. New construction starts are up, and builders are offering significant incentives including mortgage rate buy-downs. In many markets, new construction is actually more affordable than the resale market.

First-Time Buyers Are Struggling

High rates plus high prices equal the worst affordability conditions in decades for first-time buyers. Down payment assistance programs and FHA loans are more important than ever. But getting into the market — even at these rates — starts the equity-building clock, and refinancing when rates fall is always an option.

The Fed’s Next Move Matters

Whether the Fed continues hiking, pauses, or begins cutting rates will shape the second half of 2023 and beyond. Forecasters expect at least one more hike before a prolonged pause. Rate cuts are unlikely before 2024 in most scenarios.