Mortgage Rates Should ‘Gently Decline’ in 2023 — But Will There Be Houses To Buy?
Written by
Josephine Nesbit
Edited by
Nicholas Morine
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There are signs of an economic slowdown, but mortgage rates recently edged higher for the second straight week.
The average rate on a 30-year fixed-rate mortgage was 6.43% for the week ending April 27, up from 6.39% the week previous and 5.1% the year before, according to Freddie Mac’s Primary Mortgage Market Survey. However, the government-sponsored enterprise said we should see rates “gently decline” in 2023 as the rate of inflation decelerates.
Rising rates and higher home prices have pushed many prospective homebuyers to the sidelines. Financing a typical house costs $611 more than last year, according to the Realtor.com March housing trends report. While listing prices were still up 2.4% higher than a year ago, Realtor.com noted that this was the slowest growth rate seen since May 2020.
However, housing supply remains limited.
For the week ending April 22, Realtor.com reported that the number of homeowners who recently listed their homes for sale was down 21% compared to the year before — largely because of current mortgage rates. Eighty-two percent of sellers who hope to buy say they feel “locked in” by their current mortgage rate on their existing property — a rate which is much lower than what they could get on a new purchase.
Even so, there are more homes for sale on the market — 39% more — but most of these are new construction or stale listings and have sat on the market for months. As we approach summer, Realtor.com reported that the homebuying season should be picking up again soon.
“We expect to see a growing number of home sellers, consistent with typical seasonal trends,” predicted Realtor.com chief economist Danielle Hale. This leads to better opportunities for home buyers waiting to enter the market.
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