As you plan ahead to sell your house and make your move, you may be wondering what lies ahead for mortgage rates and home prices. Here’s a look at expert insights on where both may be headed so you can make the most informed decision possible.
Mortgage Rates Will Continue To Respond to Inflation
There’s no doubt mortgage rates skyrocketed in 2022 as the market responded to high inflation. The increases we saw were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% in the fall. It was the first time they’d risen that high in over 20 years.
In their quarterly report, Freddie Mac explains just how fast the climb in rates has been:
“Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”
Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that moving forward, mortgage rates will continue to respond to inflation. And, if inflation eases, mortgage rates likely will too.
Home Price Changes Will Vary by Market
As buyer demand has eased in response to those higher mortgage rates, home prices have moderated in many markets too. In terms of the forecast for 2023, some experts are calling for slight price growth while others are projecting slight price declines (see graph below). The best way to look at it is to average all of the expert forecasts together to get the full picture. When we do that, on a national level, it’s roughly neutral or flat appreciation projected for 2023.
Moving forward, home price appreciation will vary by the local market, with more significant changes happening in overheated areas. It all depends on other factors at play in that local market, like the balance between supply and demand. As Mark Fleming, Chief Economist at First American, says:
“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”
Bottom Line
If you want to know what’s happening with home prices or mortgage rates, let’s connect so you have the latest on what experts are saying and what that means for our area.
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