Key Real Estate Market Highlights from January 24-31, 2023
- Q4 GDP reports are in: The US GDP rose 2.9%, slightly above the estimated 2.8%
- Pending home sales and new home sales rose 2.5% and 2.3% respectively for December
- Year over year home sales are down 34.3%, which is also a slight improvement
- 30-year fixed-rate mortgage fell to 6.13%, down nearly a whole percentage point from its 7.08% peak in November
- The Fed is anticipating another small hike in interest rates in the short term
A Closer Market Overview
NAR Chief Economist Lawrence Yun predicts that “The recent low point in home sales activity is likely over.” This is because the real estate market was hardest hit by interest rate hikes. However all signs point to that slowing down for now. Yun reports that “The new normal for mortgage rates will likely be in the 5.5% to 6.5% range.” This means that while the Fed is anticipating another .25% hike, we can expect interest rates to fall again in the coming months. As this happens, the real estate market should begin to warm up again.
The sale of existing homes is still not in recovery just yet. However, the official numbers for January will not be released until February 21, 2023. What’s more, the Mortgage Bankers Association has reported that applications are up 3% this week, which further reinforces the uptick narrative.
So Are We or Aren’t We in a Down Market in Real Estate?
While many economists anticipate a recession to hit in 2023, current market indicators point to recovery instead. As the joke goes, you gather five economists and get seven different opinions… For a deeper dive into this conversation, check out this article. In the meantime, we recommend trusting the data and responding accordingly.
Homeowners and prospective homeowners are getting used to the idea that historically low interest rates are likely not coming back. However, if we see these rates stabilize, more people will enter the market. The next driver–and therefore indicator–for real estate health will be the jobs market. Where industries are strong and incomes stable, real estate will follow suit.
What This Means for Real Estate Professionals
Things may be looking up, however your business strategy should anticipate a cool market for a little while longer. This means you should be reevaluating your budgets, exploring emerging market opportunities, and connecting more with your audience face-to-face.
There are more agents than ever before and they’re all competing for the same reduced volume of homes. In order to thrive in this market, you will need to make a lasting positive impression and stand out.
We have some ideas that can help.
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