Brian Decker’s 2023 Mid-Year Housing Trends Update

In the beginning of 2023, we saw an increase in interest rates causing a halt in housing inventory due to uncertainty in many homeowners and prospective buyers. My summer prediction entailed little to no decrease in mortgage rates or housing prices, as well as a decrease in housing inventory. Similar to the summer prediction, this mid-year housing market reports a steady decrease in housing inventory, a slow increase in housing prices, as well as an increase in mortgage and interest rates. Continue reading to learn more about these recent trends. 

1. Housing Inventories Continue to Decrease

This year in May we have seen a 21.5% increase in homes for sale compared to May 2022. However, the rate that homes are available for sale continues to decrease each and every month as sellers decide not to list their homes due to hesitation with high mortgage rates. This results in yet another year of a decrease in housing inventories. 

2. Housing Prices Slowly Increasing

From April to May of 2023 there was an increase of $11,000 in the median list price. This is $8,000 less of an increase in median list price compared to June 2022. This annual 0.9% increase in the median list price is less than April’s 2.5% growth rate. 

3. Interest Rates Continue to Go Up

Compared to May 2022, mortgage rates have increased by 15.5% ($28,096) in the average home. The rent growth in May 2023 is much higher than the rent growth seen a month prior in April 2023 at 0.3%. 

Conclusion

High mortgage rates and housing prices allow a vicious cycle of low housing inventory to continue. Once rates are high and inventory is low, it is difficult to break the cycle. Homeowners will not want to enter the market due to high-interest rates causing hesitation to list. Until we can lower mortgage rates and housing prices, potential sellers are not going to feel comfortable putting their house on the market, consequently decreasing housing inventory.