Published by REALTOR Magazine | February 9, 2023
A slowdown is now underway, says NAR Chief Economist Lawrence Yun. But don’t expect to see dramatic price drops.
After three years of runaway home prices, buyers may soon find relief. In some markets, they may have already found it.
The National Association of REALTORS’ latest quarterly housing report shows that home price growth is cooling—though that doesn’t mean prices are falling. The national median price for a single-family existing home rose 4% in the fourth quarter of 2022, reaching $378,700. That’s a much slower pace than the 8.6% increase in the previous quarter. Further, only 18% of metro markets posted double-digit price gains in the fourth quarter of 2022, compared to 46% in the previous quarter, NAR data shows.
“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years. Still, “even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of markets due to extremely limited supply. Moreover, there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.”
—NAR Chief Economist Lawrence Yun
Still, about one in 10 markets saw home price declines in the fourth quarter of 2022. What’s more, “a few markets may see double-digit price drops, especially some of the more expensive parts of the country, which have also seen weaker employment and higher instances of residents moving to other areas,” Yun says.
Home buyers may be holding out for bigger price drops. Rising home prices have far surpassed median wage increases, and higher inflation and mortgage rates also are hampering home affordability. The typical monthly mortgage payment on an existing single-family home with a 20% down payment reached $1,969 in the fourth quarter of 2022—a 58% increase compared to a year earlier, according to NAR. That said, mortgage rates have been inching down since the beginning of the year.
