June 2023: US Real Estate Market Trends

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June 2023: US Real Estate Market Trends


Latest Trends in the US Real Estate Market

As of June 2023, the US real estate market is experiencing a slowdown in home sales and prices, with a high level of uncertainty pervading the market. According to a recent update published by Bankrate, the average 30-year fixed mortgage rate stood at 7.08% as of June 16, 2023. This is a result of the Federal Reserve’s aggressive efforts to curb inflation, which saw them raise rates for 10 consecutive meetings before taking a pause at their recent June meeting. Consequently, sales of previously owned homes have dropped by 23.2 percent since last spring, as reported by the National Association of Realtors (NAR) in their most recent existing-home sales report.

Despite being well into the spring homebuying season, the housing market is experiencing a winter chill. Home prices remain stubbornly elevated, perpetuating affordability challenges for many, especially first-time homebuyers. The median existing-home sales price has edged lower year-over-year for the third consecutive month, but experts do not anticipate substantial, nationwide price declines anytime soon. This is due to an uptick in mortgage rates and elevated home prices, which together continue to perpetuate the housing affordability crisis. Mortgage rates remain high partly as a consequence of the Federal Reserve’s aggressive efforts to tamp down inflation

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Expert Opinions and Projections

Industry experts have varying forecasts and projections about where mortgage rates, home prices, buyer competition, housing supply, sales activity, and home affordability are headed over the course of the rest of the year. Nadia Evangelou, senior economist and director of real estate research for NAR, lays out three potential rate scenarios for the rest of 2023, depending on the Fed’s moves going forward. In the first scenario, inflation stays high, compelling the Fed to regularly hike interest rates, pushing up mortgage rates to perhaps as high as 8.5 percent. In the second scenario, the Consumer Price Index reacts more favorably to rate increases from the Fed and inflation slows down gradually, enabling mortgage rates to stabilize in the range of 7 to 7.5 percent for 2023. In the third scenario, the economy experiences a recession as a result of the Fed’s repeated rate increases to combat inflation, which will likely result in rates dropping to 5%.

The impact of these scenarios on home sales is significant. In each case, sales will be down, but it’s just a question of how much. Higher rates under scenario 1 could cause home sales to drop by more than 10 percent next year. In scenario 2, home sales drop by 7 percent to 8 percent. And in the third, home activity may drop further, by more than 15 percent.

Overall, the housing market in Q2 2023 is expected to be characterized by stagnant home sales, high home prices, low inventory, and modest price appreciation. Affordability will continue to be a concern for many, and the buyer-seller stalemate is expected to persist. However, there are some signs of hope, such as an expected increase in home sales and a potential increase in housing supply due to reluctant sellers capitulating.

And if you’re ready to invest in real estate given the current trends, then speak to us at REI News. Our experts will put you in touch with the most reliable lenders who will provide you with the most affordable, reasonable real estate financing. Talk to us today!