More buyers returned to the market in March as mortgage rates dropped by more than 30 basis points by the month's conclusion. There was a year-over-year decline in home prices in February for the first time in over 11 years, while total home sales increased by the biggest proportion in any month since July 2020. Many analysts, though, can't agree on how much more home values will fall this year.

One reason is that there is still a shortage of homes nationwide. People who bought houses in the past few years, when rates were historically low, are staying put. Price stability is partially hindered by a lack of available homes for sale, making homeownership unaffordable for many people.

The April 2023 Housing Market Prognosis

Experts in the housing market are keeping a close eye on the economy as the spring homebuying season approaches. It is being pushed in many directions by rising inflation, sharp interest rates, continued geopolitical uncertainty, and recession worries. Yet there are encouraging signs of change.

The median sales price of an existing house in February fell 0.2% year over year, to $363,000, from February 2017. (NAR). A run of 131 straight monthly rises from the previous year has ended. The National Association of Realtors reports that while existing house sales increased 14.5% from January to February, they were still down 22.6% from the same month a year earlier.

Preliminary figures from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD) show that housing starts increased by 9.8 percent in February, adding to the supply of available dwellings. Nevertheless, Freddie Mac reports that mortgage rates have been declining, with the week-ending March 30-specific rate now at 6.32%.

Prospects For The Housing Market in April of 2023

Since the housing meltdown of 2008, when the production of new homes fell, a lack of available dwellings has been a problem. It hasn't recovered, and it probably won't by 2023.

The supply of available homes has remained stubbornly low, and this has supported demand, keeping housing prices higher than they would have been in any previous downturn.

When the spring homebuying season begins, limited inventory remains a critical problem for potential buyers, even though "[d]eclining rates have attracted borrowers back to the market."

NAR reports that there is a 2.6-month supply of available homes on the market at the current sales rate, which is low compared to historical norms but more than the 1.7-month supply from a year ago.

Predicted New Home Construction in 2023

Nonetheless, there are encouraging signs in the construction industry. Single-family construction starts in February grew by 9.8 percent from the previous month, while applications for building permits jumped by 13.8 percent from the previous month.

Even the most recent statistics on builders' expectations show optimism. The NAHB/Wells Fargo Housing Market Index (HMI), which measures builder confidence, increased by 2 points from 42 to 44 in the most recent report. After a year and a half of reductions, this is the third consecutive month of growth.

The Housing Market: Will it Collapse?

Home prices have risen by double digits in recent years, but many analysts believe the market will eventually level out rather than fall. This is partly because of the persistent inventory shortage that has kept prices high. " The national median house price is expected to fluctuate slightly but remain stable.

However, several experts on the housing market predict rising demand and prices in certain regions, notably in places where houses have stayed relatively inexpensive in recent years regarding median income.

"we're predicting approximately a 5% decline nationally." "Incredibly, prices are likely to rise more in some markets." Yun agrees that property prices would rise or fall depending on where you are, with more affordable places experiencing price hikes and more costly ones seeing decreases.

Do You Anticipate A Rise In 2023 Foreclosures?

Foreclosures have risen since the Covid-19 foreclosure moratorium ended in September 2021, yet they are still lower than before the epidemic. The number of foreclosures dropped by 34% in 2022 compared to 2019.

It appears that the combined efforts of the government and the mortgage sector during the epidemic and the robust economy have prevented millions of needless foreclosures. Foreclosure filings in February 2023 were up 18% from the same month a year prior. However, they were down 3% from the previous month.

In contrast to the housing crisis of 2008, many homeowners, including some who were having trouble making payments, have seen significant increases in the value of their homes in subsequent years. They are not yet "underwater," which implies they owe less on their mortgage than the value of their property.