In a housing market that is currently facing high mortgage rates, inflation issues and fears of recession, it is expected that house prices in the United States will drop in the coming year. Despite this, it is unlikely that the market will experience an increase in the number of buyers due to the higher mortgage rates. 30-year fixed mortgage rates have risen from around 3% to 7% this year, as the Federal Reserve has increased interest rates in an attempt to curb inflation. This has caused a decrease in home prices, but it has also made it difficult for people to purchase homes, especially since families are also dealing with rising costs of food, gas and other essential items.
The president of the Federal Reserve, Jerome Powell, has indicated that the central bank will reduce its interest rate hikes, which could help stabilize the market. The turbulent economy not only makes it difficult for new buyers to enter the market, but it also makes it more difficult for people who already own homes to buy new ones. For example, a couple who bought a home five years ago with a low fixed mortgage rate may want to move to a larger home with space for children. But that couple would now be affected by a much higher mortgage rate when buying the new home, which could make the move difficult. Lower prices don't necessarily mean that the market will be cheap enough to attract a wave of buyers. Both current and future owners are under economic pressure in other areas of their budget, as inflation keeps prices high at gas stations, grocery stores and elsewhere.
Most economists have not yet made a decision on whether the country is in a total recession, but the National Association of Home Builders (NAHB) states that the housing market already exists. In addition, the country continues to face a housing deficit. The good news is that things could improve by 2024, especially if the Federal Reserve significantly eases rate hikes. The NAHB expects a continued decline next year in the construction of single-family homes, and Zillow also expects that more people next year could pool funds to buy a home with family members or a friend other than their spouse. Dietz predicts that the housing market will recover in 2024, even if the rest of the economy doesn't seem to be doing the same. While demand and price gains are cooling, any correction is likely to be modest according to economists and real estate analysts.
And if so, any fall in prices could be offset by further increases in federal interest rates that are expected to come in the coming months. That means they still have capital in their homes and aren't underwater when you owe more than the house is worth. Rather than waiting for much lower prices, experts suggest buying a home based on your budget and needs. A good agent will work closely with you to set a competitive price for your home while responding to questions and offers from prospective buyers. In the meantime, keep in mind that, as with any investment, the best time to buy is often when prices are low.