NAR forecasts 4.78 million existing-home sales, stable prices in 2023

Home sales 2023
A home "sold" sign in northeast Cedar Rapids. CREDIT RICHARD PRATT

Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors (NAR), forecasts that 4.78 million existing homes will be sold, prices will remain stable, and Atlanta will be the top real estate market to watch in 2023 and beyond. Mr. Yun unveiled the association’s forecast Dec. 13 during NAR’s fourth annual year-end Real Estate Forecast Summit.

Mr. Yun predicts home sales will decline by 6.8% compared to 2022 (5.13 million) and the median home price will reach $385,800 – an increase of just 0.3% from this year ($384,500).

“Half of the country may experience small price gains, while the other half may see slight price declines,” Mr. Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10-15%.”

Mr. Yun expects rent prices to rise 5% in 2023, following a 7% increase in 2022. He predicts foreclosure rates will remain at historically low levels in 2023, comprising less than 1% of all mortgages.

Mr. Yun forecasts U.S. GDP will grow by 1.3%, roughly half the typical historical pace of 2.5%. After eclipsing 7% in late 2022, he expects the 30-year fixed mortgage rate to settle at 5.7% as the Fed slows the pace of rate hikes to control inflation. Mr. Yun noted this is lower than the pre-pandemic historical rate of 8%.

“The demand for housing continues to outpace supply,” Mr. Yun said. “The economic conditions in place in the top 10 U.S. markets, all of which are located in the South, provide the support for home prices to climb by at least 5% in 2023.”

The National Association of Realtors is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.