Are Home Sales Slowing Down? Housing Market Predictions For 2023
Author:
Dan RafterFeb 29, 2024
•8-minute read
The numbers show that home sales are slowing. The National Association of REALTORS® (NAR) reported that total existing home sales this May dropped 20.4% when compared to the same month a year earlier.
This isn't surprising. The pace of home sales in the United States has been sluggish since the Federal Reserve Board first began raising its federal funds benchmark interest rate in March of 2022.
The Fed has been increasing this rate to slow inflation. Though the Fed's rate isn't directly tied to the rates borrowers receive when applying for a home loan, mortgage interest rates began rising at the same time that the Fed made its move. As rates for mortgages continue to rise, home sales have continued to fall.
This, too, isn’t surprising: Higher interest rates equal higher monthly mortgage payments, something that makes owning a home more expensive. If owning a home is more costly, fewer buyers will want to or can enter the housing market.
But what will happen during the rest of 2023? Will housing sales remain low or begin rising again? Read on to learn more about the challenges and opportunities in the U.S. housing market today.
Are Home Sales Slowing Down In 2023?
The sale of existing homes rose slightly in May when compared to April, jumping by a modest 0.2%, according to research from the NAR. However, sales remained down by more than 20% this May when compared to the same month a year ago.
The association says that it expects about 4.3 million homes to sell in the United States this year. It reported that last year that existing U.S. home sales totaled a higher 5.03 million. Though that is better than what the association expects to see this year, 2022 was the weakest year for U.S. home sales since 2014.