Uncertain Housing Forecasts for 2023 Reveal a Market Hingeing on Mortgage Rates

Early predictions for the 2023 housing market are all over the map, but experts agree that the speed of home sales depends on the trajectory of mortgage rates in the near future

As 2022 comes to a close, prospective homebuyers are breathing a sigh of relief and hoping for greater affordability in 2023, but according to Bill McBride’s CalculatedRisk Newsletter, expert forecasts for the next 12 months reveal only one steady housing trend in the near future: uncertainty. Though 2022 saw steep declines in new and existing home sales as well as total housing starts from the year prior, the year to come could see a faster sales pace if mortgage rates moderate.

In the meantime, home prices are still on the rise, but McBride predicts that housing costs will decline in 2023 and fall 10% or more from peak-to-trough.

There is an especially wide range in the forecasts for house prices and shows the difficulties in modeling this housing cycle. My view is house prices will decline in 2023 and will fall 10% or more from peak-to-trough (see House Prices: 7 Years in Purgatory).

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