June Housing Forecast - What Does The Real Estate Market Look Like?

While home buying season has officially kicked off, housing markets continue to experience the winter chill.

Freddie Mac reported that the average national 30-year fixed mortgage rate remained higher than last year and reached its record high of 6.79% in the week ending June 1st. This marked a 40 basis point rise over its level seen a month prior. A "basis point" refers to one-hundredth of a percentage point.

National Association of Realtors (NAR). However, existing home sales remain steady, with slight gains of 0.2% reported by the National Association of Realtors (NAR).

Although median house prices for four consecutive months declined year-over-year - an encouraging sign for prospective homebuyers--experts aren't forecasting significant nationwide price decreases in the near future. Prices rose slightly across Northeast and Midwest regions while falling overall across South and West areas.

Prices of homes have continued to soar and present serious affordability challenges to first-time homebuyers and others who wish to enter the housing market for the first time. Furthermore, the national housing supply is limited due to people purchasing properties at record-low interest rates earlier this decade.

Although home prices had yet to see record levels in June 2022 reasonably, recent data indicate that they fluctuate or increase depending on which region one life.

Home Market Forecasts for June 2023

Buyer-seller impasse remained intact during May, as increasing mortgage interest rates combined with home price inflation to prolong an affordability crisis that threatens continued inflation, bank sector instability tensions over debt ceilings and even potential recession concerns persisted in the air.

Mortgage rates have seen some relief following the Federal Reserve meeting held in June, wherein it announced an end of rate increases, indirectly affecting long-term mortgage options such as 30-year fixed-rate loans.

Fed watchers believe recent vital jobs, personal consumption expenditure data, and still high inflation could prompt more rate increases down the road rather than remain on hold for an extended period.

This situation continues to strain the residential real estate market and remains unpredictable.

On the other hand, home buyers gained tremendous insight, with median home sale prices dropping 3.1 percentage points year-over-year and reaching $396,100 in May, according to NAR data. This marked four months in which year-over-year price declines were seen after years of record-setting growth rates.

However, according to a new Federal Housing Finance Agency House Price Index (HPI) report, house prices increased 4.3 percent compared with Q1 2022, resulting in the index hitting its all-time peak of 398.0 during March. FHFA HPI can be understood as an index that measures house values across 50 U.S. states and hundreds of cities since the mid-1970s.

April saw an estimated increase of 4.1% - this news from U.S. Census and HUD was welcomed with open arms!

In a study, Lawrence Yun, Chief Economist for NAR, stated: "Home sales appear to fluctuate between extremes but remain higher than recent lows for cyclicality. Rising employment over recent months coupled with tight inventory levels and variable mortgage interest rates has created an unstable residential demand environment."

Few experts predict a slow market recovery; mortgage rates continue to fluctuate and shift regularly, mirroring this change.

Rates remain between six and seven percent; on June 1st, a 30-year fixed rate hit 6.79 1.9% - its highest point since November 2022 - before gradually declining throughout June to settle at 6.67 percent by June 22nd.

"With current economic conditions prevailing and mortgage rates continuing their upward climb and home prices being in an over-supply position, home values could experience a long gradual climb with occasional setbacks along the way," Danielle Hale of Realtor.com said in an email announcement.

One such bump is due to new mortgage fee regulations issued by FHFA. As of May 1st, traditional borrowers who put down 5-25 percent are expected to incur more significant loan-level price adjustments (LLPAs) than those with less than 5 percent down.

The Biden-Harris administration recently revised mortgage rules to make homeownership "more accessible and cost-effective for middle and lower-income borrowers." While this change has received praise, other housing experts have raised concerns that increasing fees might burden those considered less risky borrowers.

Although its effects remain uncertain, current mortgage application activity appears relatively subdued.

"With rates remaining volatile and inventory for sale being scarce, we have not witnessed sustained increases in applications to purchase," according to Joel Kan, Vice President and Deputy Chief Economics for Mortgage Bankers Association.

Since mortgage rates exceed 6% and 97% of borrowers have rates lower than 6 percent, according to CoreLogic data, it seems unlikely that mortgage applications will see an upswing soon.

"Dampened affordability can pose challenges to both potential homebuyers and homeowners unwilling to alter their low-interest rate mortgage and list their home for sale," according to Sam Khater, chief economist of Freddie Mac, in an open statement to the press. If this situation continues, however, and restricts supply further, it could provide builders with opportunities to address the nation's housing shortage more directly."

Home Inventory Outlook in June 2023

Following the financial meltdown 2008 and the subsequent housing recession, inventories remain scarce, with construction homes decreasing substantially as construction resumed only partially by mid-2023. Although signs are promising recovery soon enough, complete restoration may take until 2023 for full recovery to take place.

Housing inventory at near historic low levels has helped drive up housing market values during economic downturns, leading to rising home prices.

"Inventories have decreased by around 46% since 1999," claims Jack Macdowell, Chief Investment Officer and Co-Founder of Palisades Group.

Current sales activity places unsold houses at an inventory supply level of 2.9 months, according to NAR; However, higher than last February (2.2) or March (2+6) levels, supply levels still do not compare favorably against historical standards, given the growing buyer interest in real estate investments.

Since many homeowners currently possess loans with mortgage rates lower than 6.6%, experts in this field predict a dismal outlook on when inventory may resume normal levels.

"Macdowell believes strongly that inventory issues will be solved by 2023."

Home Starts in 2023 Housing Forecast In the interim, signals coming from home construction can often be misleading.

According to Census Bureau and HUD figures, Single-family construction started rising 1.6 percent year over year in April, as building permit requests dropped 1.5 percent from March.

However, builders' confidence is rising gradually despite falling building permits.

Recent results of the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), which measures builder sentiment, show an upswing between 45-50. This marks five consecutive monthly increases after 12 consecutive decreases and the first time since 2022 that it crossed 50.

Attaining 50 points or above on any scale of construction optimism is an impressive milestone. Reaching that number indicates more construction contractors feel optimistic about future opportunities in construction processes.

"New homes are taking on greater significance in the market since homeowners with mortgage rates that are significantly below current mortgage rates are opting to stay put, further decreasing existing home inventory," stated NAHB chairman Alicia Huey.

Construction companies face unique challenges as they attempt to meet client demand; higher material prices, an acute labor shortage and tightening credit terms due to Federal Reserve interest rate hikes pose issues for them.

"Homeowners, homebuyers, lenders and builders are trying to anticipate and adapt to changes in interest rates, house prices and supply and demand resulting from Federal Reserve decisions," Macdowell states. As a result, builders might hesitate to undertake ventures which bring necessary housing products onto the marketplace.

Could the Housing Market Collapse by 2023? Economists predict that, given its current inventory shortage and higher home prices, housing may experience more of a gradual recovery instead of suffering significant setbacks as time goes on.

S&P CoreLogic Case-Shiller Home Price Index showed an average month-over-month price rise of 1.3 percent before seasonal adjustments; after these were applied, month-to-month growth stood at just 0.4%.

As prices rose slightly this month for the second month running after seven straight months of decreases, many experts see this new trend as evidence that home price decreases may soon become history.

In their report, "Two months of rising prices don't guarantee an abrupt turnaround, yet March results show some hope of ending price decline that began in June 2022," stated Craig J. Lazzara of S&P DJI. However, higher mortgage rates and economic woes likely to hinder home values over time will still impact prices over time.

But experts agree that whether the prices of homes increase or decrease will vary based on where your potential property lies.

Miami, Tampa and Charlotte in North Carolina all saw year-over-year increases of 4.7% to 7.7 %; Austin, Texas; Boise, Idaho; Salt Lake City and West Coast areas experienced much larger price spikes during this outbreak period.

"The further west we go, the less expensive costs become. Seattle (-12.4 percent) currently leads San Francisco (-11.2%) as having the lowest league prices," said Lazzara. Lazzara noted: It should come as no surprise that Southeast (+5.4 percentage point) increases in power compared to Western (-6.2 percentage points decrease in strength.).

Though some areas are seeing prices decline, experts note that homeowners today stand safer than when the 2008 financial crisis unfolded. Many have equity-positive homes, so chances for collapse are reduced significantly.

"Homeowner equity levels have reached unprecedented highs over the past several decades. This bodes well for homeowners as they see a major appreciation of their properties," according to Nicole Bachaud of Zillow's economist team.

Are We to Expect Too Many Foreclosures by 2023?

Property information provider ATTOM said foreclosure filings decreased by 10% monthly. Still, they increased by 8% year over year in April, with closed-door closings falling 39% month-on-month while up 3% year-over-year.

"Foreclosure activity continues to slow and may even improve in 2023, according to Rob Barber, Chief Executive of ATTOM. April saw a 10% surge in general activity after 20 percent growth was noted in March."

But Barber noted that any decrease in foreclosure activity during April was likely an everyday occurrence, and any further decreases weren't necessarily inevitable.

As noted above, although foreclosure rates have increased annually since 2015, experts don't anticipate an upsurge in foreclosures until 2023 - regardless of a decline in home values - due to most homeowners holding significant equity due to house price appreciation over recent times.

What Is The Ideal Timing To Purchase A House In 2023? Any purchase decision in real estate requires careful thought. As housing represents one of the significant one-off purchases, people typically make during their lives, ensuring your finances are in order is essential before diving in head first.

Use our mortgage calculator to estimate monthly housing expenses depending on the downpayment amount and interest rates.

Predicting what may transpire this year when purchasing a house can be hazardous. "Those hoping for lower interest rates tomorrow might end up disappointed," says Neda Navab, president of Compass, an online real estate technology business.

"Like any market, housing can be challenging to predict. To best assess buying decisions when the home meets all their family's immediate and foreseeable requirements and can afford," states Orphe Divounguy, Senior Macroeconomist at Zillow Home Loans.

Divounguy believes stepping onto the ladder of housing is an excellent way to start building equity and your net worth.

Rather than waiting for lower house prices, experts advise buying according to your finances and needs. When you find the ideal property that matches both these factors - being located somewhere you like while being affordable enough for financing - experts suggest going ahead with it without delay as buying too many sacrifices could end in buyer's regret leading you down a different path altogether and leading you away from purchasing any house at all.

Strategies for Navigating Today's Housing Market

With prices softening but your desired location still being out of your price range, being flexible when searching for homes may be essential in ensuring they find you! Therefore it is vitally important to remain open-minded during house hunting.

"For individuals in desperate need of owning their apartment and capable of telecommuting or changing jobs, low-cost market housing could be the perfect solution," according to Robert Frick of Navy Federal Credit Union's chief economist team. Millions have made that switch already, and you could do too!

Before looking for your ideal house, ensure all your documents and finances are in order - take an inventory of your finances, gather any required paperwork and shop multiple lenders; all this will make finding one much simpler in today's highly competitive real estate market.

"To stay competitive in today's highly competitive real estate market, only those best prepared can succeed by securing financing, knowing what their budget allows and keeping tabs on rates and listings," according to Frick. Also, know your monthly installment amount, including taxes; plan how it fits within your financial plan as part of their decision.

Knowledgeable realtors could give you an edge in today's overheated housing market.

"To determine your options with confidence and experience," advises Divounguy, "find an agent you trust who knows exactly what the market offers," according to her advice. Divounguy notes: - A dearth in inventory means buyers could face intense competition for areas and properties at lower costs as a result;

Be extra wary when selecting an agent as your first-time homebuyer.

"With shifting market conditions and recent development in your desired neighborhood, it is crucial that you work with someone experienced who understands its nuances while cooperating well with loan agents.

Divounguy says sellers need to work closely with an agent to set a reasonable price when selling in today's housing market. He also asserts that houses at reasonable prices tend to attract the most significant buyer interest while other homes remain available.

Sellers should begin taking steps as early as possible to prepare their properties for sale.

"Sellers often regret that their house wasn't ready for sale sooner," notes Divounguy. To ensure you stand out online and maintain an appealing appearance.

Divounguy suggests sellers include 3-D virtual tours or interactive floor plans in their listings on Zillow to increase viewership by six times and realize up to an additional 80% savings. According to her data, these tools have generated six times more views and contributed an extra 80% in savings over using more conventional advertising tactics alone.