You're right about the variety of predictions. Ours are on the stronger end for 2023. The full 2023 housing forecast and economic forecast are linked, but I'll summarize some key takeaways.

1. We expect inflation to slow, but not return to its target which means that the Fed keeps rates higher for most of the year.

2. This keeps upward pressure on mortgage rates (though admittedly, we've seen more weakness in rates for 2023 than we initially expected).

3. Because mortgage rates and home prices remain relatively high, sales decline. Our expectation is that sales for 2023 will be down 14%, which would actually put them slightly above the pace we've seen in recent months.

4. Slowing home sales will help curtail price growth, but we expect to see home sellers pull back from the market in 2023, which will keep home prices from adjusting quickly, and we expect them to grow in 2023.

The 2023 housing market is not going to be as strong as we've seen over the past few years from either a sales or price growth perspective, but I do think it will surprise those expecting a crash.

-Danielle

I talked to a lot of economists last year about the 2023 market, and everyone agreed that the range of forecasts was unusually wide. One thing everyone agreed on is that there’s going to be significant regional variation. Unlike in 2021 and 2022, where basically every market in the U.S. showed strong price growth, economists expected some markets to slow far more than others this year. For the most part, the markets where prices rose the most during the recent boom are also expected to post the steepest price declines.

And remember, the housing market is in a much stronger position today than during the housing boom and bust of the early 2000s. In many markets, even a 20% home-price drop would not bring prices back to pre-pandemic levels, so many homeowners would still have equity.

-Nicole

edit: added gift links