Residential Real Estate Market Outlook

Buyers and investors might ask someone to describe the real estate/housing markets.

You might call it a market driven by intense demand for homes, not just dream homes, but safe havens for themselves and their family at almost any price. It’s one of severe frustration for all including rate-stuck homeowners who can’t sell. It’s colored by strong consumer savings, and strong employment, where sellers are least comforted by the ridiculous return they might see when they sell.

And it’s one with young buyers who have almost given up on the idea of ever buying a property given the high prices. You might call this housing market inaccessible for most. In may ways, it reflects the current White House regime’s self-imposed addiction to stimulus spending while generating the price fires it sets with high rates and disincentives for builders.

A change may only come with a newly elected President.

A No Landing Scenario for the Economy

Forecasting the outlook for the real estate and housing markets is not so simple.  The rolling recession the US government is engineering is helping to push the real downturn into Q4 2023/Q1 2024.

Investors and home buyers are told to look for a recession by economists and experts, and on the other hand, some suggest what was a hard landing, may actually become no landing at all. If inflation is controlled, interest rates can fall back a little, yet the FED expects a consumer-fed sales bonanza when they decline.  Their goal of 2% is clearly unrealistic however, but by doing a rolling recession, they can avoid a synchronized catalyst for big inflation, and thus a higher lending rate.

Will 2024’s Housing Market be a Repeat of 2023?

Some say 2024’s real estate housing market | will be much like 2023. Credit rates will likely remain aloft to stop house buying, raise unemployment, suppress business creation and spending, and keep wages down.  Yet in 15 months from now, the 2024 Presidential elections will happen, and if the Republican representative should win, they will not adhere to high rates. Instead, they’ll end regulations that suppress investment and production in the US and boost the supply side, particularly desperately needed new homes.

Now mid-year 2023, we might see housing sales slide further into 2024 while home prices remain where they are. As stated many times, housing supply (and homes people actually want), is in severe shortage. As the NAR chart below shows, sales have only dropped 11% in the normal median price range.

The FED continues to threaten even as inflation drops.  Mortgage rates are above 7% again and look to climb higher with two more projected FED rate hikes coming.

Since inflation will be lowered, we can forecast better conditions ahead for 2024 and the next 5 years.   As interest rates fall over 2024, will buyers will jump back into the market?  It looks like they will, given employment remains strong with only a 3.6% rate announced July 7th. Wages are receding which helps the inflation threat.

Yet, as we discuss here, the view from 2024 to 2027 is better. It looks like homebuyers are in for a tough time with high prices, low inventory, and high mortgage rates.  We may need to see inflation drop another 3% before we see a housing market turnaround.

Demand for Homes Rising

Redfin’s chart below shows demand for housing is rising very sharply considering the governments push to make home buying impossible.

US Housing Demand last 3 years.
US Housing Demand last 3 years. Screenshot courtesy of Redfin.

Cities with Fastest Rising Home Prices

Fastest rising home prices. Screenshot courtesy of Redfin Realty.
Fastest rising home prices. Screenshot courtesy of Redfin.

American investors are still sitting on a lot of cash, people who can buy homes. They’re hovering over the 6 month and 5 year stock forecasts to pick the time to buy, but they may decide to buy a home too after backing out of deals recently. See the stats for Florida and California.

The Real Estate Housing Market in May

In May, NAR reports that existing home sales recorded a minor gain of 0.2% in May. Sales retreated 20.4% from one year ago.  Homes for sale inventories of unsold existing homes grew 3.8% vs April, to leave about of 3.0 months’ supply at the current monthly sales pace.

NAR Chief Economist Lawrence Yun said “Mortgage rates heavily influence the direction of home sales… Relatively steady rates have led to several consecutive months of consistent home sales. Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. ”

New Home sales May 2023.
New Home sales May 2023. Screenshot courtesy of TradingEconomics.

Indeed, buyers are flocking to the new home construction market to hunt down their dream home.

Total existing home sales USA. S
Total existing home sales USA. Screenshot courtesy of NAR.

The median existing-home price for all housing types in May fell 3.1% to $396,100, vs May 2022 ($408,600).

real estate housing market prices May
Median homes prices history chart USA. Screenshot courtesy of NAR.
real estate housing market price changes
Median homes prices history chart USA. Screenshot courtesy of NAR.

NAR Chief Economist Lawrence Yun stated that “Home sales are bouncing back and forth but remain above recent cyclical lows and, the combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”

Single-Family and Condo/Co-ops

Single-family home sales fell .3% to a seasonally adjusted annual rate of 3.85 million in May from 3.86 million in April and down 20.0% from the previous year. The median existing single-family home price was $401,100 in May, down 3.4% from May 2022.

Existing condominium and co-op sales rose 4.7% to 450,000 units in May, yet are well down 23.7% from one year ago. The median existing condo price dropped by $100 to $353,000 in May.

According to Freddie Mac, the 30-year fixed-rate mortgage(link is external) averaged 6.69% as of June 15. That’s down from 6.71% the previous week but up from 5.78% one year ago.  FED noise about raising interest rates further might rattle many buyers and in fact the rate now in July .

Primary Mortgage Rates July.
Primary Mortgage Rates July. Screenshot courtesy of Freddie Mac.

All-cash sales accounted for 28% of transactions in April, up from 27% in March and 26% from 12 months ago.

New Home Construction June 2023

New home construction got a boost in May, likely because the existing real estate/housing market is unable to fulfill demand.  The new homes sector also can be more creative with home design to adapt to buyer demand. It’s nice to see, however, sales are still well down from 2022.

New home building permits rose 5.2 percent above last month’s rate of 1,417,000 yet that is 12.7 percent below the May 2022 rate of 1,708,000.

New housing starts rose 21.7% vs April’s estimate of 1,340,000 starts and that is 5.7% higher than May of 2022. Single‐family housing starts in May rose 18.5% to 997,000 and that’s up 18.5% vs the April numbers of 841,000. The May rate for multifamily buildings with 5 units or more was 624,000.

New housing build completions rose 9.55 from April’s 1,386,000 releases and that’s up 5% from the May 2022 rate of 1,446,000. Completed builds of new single‐family homes in May rose 3.9% to a rate of 1,009,000 which is 3.9% above the April rate of 971,000 completions.

New real estate housing market construction
New Residential Housing Construction Report. Screenshot courtesy of

Home Price Changes June

NAR’s latest price city by city, shows those metros with increasing listings prices year over year. Regionally, the Northeast saw house listing prices jump by 6.4% as listings dropped by 24.6%.

Metro Area (June 2023 latest stats) Median Listing Price Median Listing Price YoY Active Listing Count YoY Median Days on Market
Price Reduced Share
Cincinnati, Ohio-Ky.-Ind. $390,000 20.00% -1.70% 30 10.30%
Rochester, N.Y. $274,000 19.60% -11.30% 12 7.00%
Los Angeles-Long Beach-Anaheim, Calif. $1,172,000 17.70% -20.80% 39 8.70%
Hartford-East Hartford-Middletown $434,000 17.40% -27.90% 18 5.90%
Boston-Cambridge-Newton, Mass.-N.H>Boston-Cambridge-Newton, Mass.-N.H. $866,000 15.50% -15.90% 24 12.00%
San Diego-Chula Vista-Carlsbad, Calif. $1,095,000 15.40% -35.90% 31 10.70%
Providence-Warwick, R.I.-Mass $550,000 14.50% -19.40% 31 6.40%
Columbus, Ohio $399,000 14.10% -1.30% 23 14.40%
Kansas City, Mo.-Kan. $453,000 13.60% 11.10% 50 12.00%
Buffalo-Cheektowaga, N.Y. $278,000 13.50% -3.80% 31 7.10%
Milwaukee-Waukesha, Wis. $380,000 13.50% -25.00% 29 8.60%
Virginia Beach-Norfolk-Newport News, Va.-N.C. $395,000 12.90% -9.60% 29 11.50%
Richmond, Va. $442,000 12.40% 1.90% 40 7.10%
New York-Newark-Jersey City, N.Y.-N.J.-Pa. $749,000 11.00% -14.30% 51 8.20%
Cleveland-Elyria, Ohio $248,000 10.40% -9.40% 38 10.50%
Indianapolis-Carmel-Anderson, Ind. $350,000 9.40% 18.30% 36 16.90%
Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va. $644,000 9.20% -26.30% 32 9.10%
Minneapolis-St. Paul-Bloomington, Minn.-Wis. $460,000 8.90% -4.70% 31 11.20%
Oklahoma City, Okla. $350,000 8.70% 29.30% 45 15.40%
Louisville/Jefferson County, Ky.-Ind. $325,000 8.30% -4.40% 29 13.30%
Memphis, Tenn.-Miss.-Ark. $327,000 7.30% 59.40% 44 16.20%
Portland-Vancouver-Hillsboro, Ore $640,000 6.70% 8.10% 34 16.10%
Chicago-Naperville-Elgin, Ill.-Ind.-Wis. $382,000 6.30% -23.40% 34 9.70%
Sacramento-Roseville-Folsom, Calif. $679,000 5.60% -33.40% 33 12.40%
Nashville-Davidson-Murfreesboro-Franklin, Tenn. $591,000 5.20% 63.30% 34 20.80%
St. Louis, Mo.-Ill. $289,000 3.50% -3.10% 39 10.30%
Seattle-Tacoma-Bellevue, Wash. $825,000 2.80% -25.10% 29 12.50%
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. $355,000 1.90% -13.90% 45 11.50%
Baltimore-Columbia-Towson, Md. $366,000 0.70% -18.20% 36 10.80%
Birmingham-Hoover, Ala. $300,000 0.50% 22.80% 43 12.20%
San Francisco-Oakland-Berkeley, Calif. $1,150,000 0.40% -30.00% 32 10.10%
Pittsburgh, Pa. $240,000 0.20% -0.90% 47 14.20%
San Jose-Sunnyvale-Santa Clara, Calif. $1,498,000 0.20% -44.10% 29 8.10%
Charlotte-Concord-Gastonia, N.C.-S.C. $441,000 0.10% 10.40% 38 12.60%

What’s the Forecast for the rest of 2023?

That depends on political events. FED chair Powell says inflation is still a problem and won’t be beaten for a while. Consumers however a little soured and are cutting their spending. They may not be losing their jobs and more are being created.

Mortgage rates and home loan qualification are critically important. Nadia Evangelou, senior economist and director of real estate research at NAR, poses 3 mortgage rate scenarios for 2023:

  1. if inflation remains above expectations, the Fed could raise interest rates repeatedly for mortgage rates near 8.5%
  2. the CPI eases against Fed’s rate hikes resulting mortgage rates near 7 to 7.5 percent for the rest of 2023
  3. Fed gets more aggressive, perhaps overshooting its goals, with the economy going into a recession resulting in mortgage rates only dropping to 5%.

It appears it’s all about the FED in NAR’s eyes.

See more on the Atlanta housing market, Boston housing market, New York housing market, Florida housing market and California housing market. Also, see reports on Los Angeles, San Diego, Dallas, San Antonio, Austin, Houston, Denver, Sacramento, San Francisco, ChicagoSalt Lake, Boca Raton, Tampa, Miami, and Seattle.

See more on the 5 year real estate forecast along with the 5 year stock market forecast for more context.

Home Sales Trends 2023

The chart below from NAR shows us the steep year over year declines in sales, and shows us where we’re headed as the Fed rate increases during 2023. Those having to renew their mortgages will be under pressure, perhaps to sell as living “house poor” takes its toll. As unemployment increases, more homes will pour into the market.

NAR’s 2023 Forecast

The National Association of Realtors™ forecasted home prices in 2023, would rise 5.4% during 2023, while mortgage payments would grow 28%. They believe inventory will increase by 22.8% yet will be lower than pre-pandemic 2019. Yet, inventory increases do not appear to be happening.

Realtor 2023 housing market forecast.
Realtor 2023 housing market forecast. Screenshot courtesy of NAR.

What do Homebuyers Believe?

Homebuyers are willing to pay less for a home purchase and they believe mortgage rates are going to climb. That suggests they see no openings for them in the market in 2023.

Fannie Mae Home Buyers Purchase Sentiment Index.
Fannie Mae Home Buyers Purchase Sentiment Index. Screenshot courtesy of Fannie Mae.

Market Factors

Here’s some factors that suggest home prices will decline however the question of whether there might be a housing market correction or crash is unsettled (stock market experts expect a big 20+% correction soon so we know risk is very high).

  • inflation looking like it will persist in 2024
  • democrats may not get the no2 $7.2 billion in the budget nor the tax raise they want
  • deglobalization is altering supply chains leaving gaps in supply
  • international trade tensions rising further by 2024
  • commodity prices heading back up with China reopening
  • natural gas and oil prices seem to be sagging for now (Biden won’t buy back significant oil reserves before the 2024 election).
  • consumer sentiment at very low levels and will likely fall after recent economic news
  • consumer savings depleting every month
  • jobless claims are stable, and employment in some sectors/states did get hit
  • mortgage rates continue rising quicker than the Fed rate thus stymieing homebuyers

What About 2024?

Zillow forecasts home values will increase 5.8% from May 2023 through May 2024. They predict the US housing market will return to pre-pandemic, 2019 norms — at least in terms of inventory and in purchases made by first-time home buyers.

Rental Housing Report

Given buyers can’t buy a house or condo, they are plunged into an already diminished rental marketplace. This has resulted in big rent increases, and in some cities this growth remains in many cities where Americans are migrating to.

With the economy cooling however, rent growth has dropped strongly, but still remains above 6% nationally. That makes rental properties the hottest investment going. Some cities such as Miami, Jersey City, New York City Manhattan, San Jose, Fort Lauderdale, Honolulu, St Petes, and Philadelphia are seeing brisk rent price growth.

Rent price last 12 months.
Rent price last 12 months. Screenshot courtesy of Zumper.

Home Buyer and Home Sellers Decision

The US economic forecast is very uncertain so forecasting home prices in the next 3 to 6 months, or next 5 years is more than just difficult. However, we can feel confident that home prices will stay elevated and that real estate investors and buyers will find homes holding their value for many years, even past a recession.

Contradictory factors complicated decision to buy:

  • home price history timeline charts show prices keep rising faster than inflation
  • affordable housing shortages wont’ be fixed anytime soon – endless demand
  • rising US immigration and more migration to low tax states
  • millennials still need to buy to start their families
  • rent prices are rising too fast which eats down payments and savings
  • those buying in high tax states could see lower prices
  • weak political support for new housing zoning and builder assistance
  • a Republican mid term election may encourage investors that the future is brighter
  • it’s the only investment you can live in
  • mortgage rates will likely recede once this current economic crisis eases (after recession)
  • big fortunes from investing in the stock market are over now
  • young adults more aware of financial planning, retirement, and long term value of a house
  • rental income properties offer excellent returns, rising rents, and good tax writeoffs
  • deglobalization means growing investment in US businesses and supply chains

Will home prices drop and is a housing crash possible? Experts say not likely because demand is too high and buyers do have money to purchase houses.

Stats show the luxury homes market isn’t being affected much (see stats below) so wealthy buyers aren’t anticipating a stock market crash or a housing market crash in the US.  Home sales in the south are seeing a steep change and markets such as Austin Texas look very shaky with huge increases in inventory.

Buyers still can buy via 5 year adjustable rate mortgages, fully knowing that rates in the years ahead will be lower.

Stats for Major US Metros

Interested in your local real estate market?  See the metro reports for Boston, Atlanta, New York, Philadelphia, Los Angeles, San Diego, Bay Area, Dallas, Denver, Houston, Chicago, and Miami. See also reports for smaller centers including Salt Lake City, Austin, Colorado Springs, San Antonio, Tampa, Seattle, and Manhattan.

28 Key Factors Driving the Home Buy/Sell Decision for 2023

  1. stronger economic recovery was expected in 2nd half and may happen if debt ceiling agreement is reached
  2. FOMO fear of missing out amidst a recovery
  3. fear of having to rent and be exposed to homelessness
  4. millennials and even Gen Z’s forming new families and need a house
  5. staying put — homeowners have nowhere to go thus can’t sell
  6. home buyers want homes in more suburban and rural areas
  7. work from home expected to continue although not like it was in 2021/2022, as many are returning the big metros
  8. government will spend more stimulus money because they want to ensure the jobs and housing markets don’t stagnate
  9. Fed promised to keep interest rates down but may raise them
  10. supply of homes making it unlikely many will be able to buy
  11. new home construction, material and land prices rising faster
  12. foreclosures may free up some homes for sale
  13. migration: work from home still driving buyers out of the cities for more room for a home office, backyard, space to relax
  14. migration: businesses moving out of high tax states to lower-tax states
  15. inflation plus money supply plus need for housing could inflate house prices severely
  16. buyers holding high-value stock portfolio’s could sell to buy a home
  17. buyers see a house as a potential rental income property
  18. many sellers want to get out of the city they live in for something new after a horrible pandemic period
  19. real estate is a preferred asset when cash, savings, and stocks can only go down in value
  20. cities and regions will still not allow housing development (NIMBYs) thus more demand for the limited available stock of homes
  21. homes are a safe haven (those renting saw how insecure their week to week lifestyles are where they could be left with nothing later in life, and wondering whether social security will even over their bills)
  22. speculation (real estate investors including the new crowdfunding buyer who can take more risk don’t see a big downside to real estate and are willing to pump money in for houses or rental properties)
  23. as employment grows there will be more demand for homes in 2021, 2022 and for 5 years ahead
  24. states such as Texas, Florida, Arizona drawing new residents (climate, jobs, business growth, low taxes)
  25. Los Angeles, San Francisco, New York losing residents (cost of living, taxes, failing economies)
  26. global economic growth will hit 4% in 2021 (world bank report)
  27. mortgage renewals — 225,000–500,000 homeowners could face foreclosure this year if rates go up
  28. homelessness and crime in the major cities will become a negative factor driving people out of the cities to the suburbs and smaller rural towns

There is no consensus on the housing market’s outlook given political battles and uncertainty about how inflation will play out and how the FED will react.  The FED is not credible as a forecast source given the misstatements and predictions they’ve made.

All markets, including Los Angeles, San Diego, Denver, New York, Manhattan, Dallas, Boston, Philadelphia, Atlanta, Chicago, Austin, San Antonio, Salt Lake City, Tampa and Miami, will likely see flat home prices in 2023 and 2024 but see growth beyond that to 2027.  Florida and Texas are still booming while California’s housing market forecast is looking a little brighter.


Real Estate Housing Market | Real Estate Forecast | Housing Market Crash | Dream Homes | California Housing Market Forecast | Florida Housing Market Forecast | Real Estate Housing Market Predictions for Next 5 Years | San Diego Housing Market | Denver Housing Market | Boston Housing Market | Affordable Housing Crisis | New York Real Estate Housing Market | Will Home Prices Fall? | Google Finance | Author Gord Collins