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Despite expecting a recession and reduced inflation that would ordinarily put downward pressure on prices in 2023, a critical shortage of housing means prices are unlikely to change much, two economists told the Daily Caller News Foundation.
The median sales price for existing homes increased 6.6% in October compared to the same month in 2021, jumping to $379,100, according to the National Association of Realtors (NAR), primarily due to demand outstripping supply, according to both Nadia Evangelou, senior economist and director of real estate research at the NAR, and E.J. Antoni, economist at the Heritage Foundation. The inventory of unsold existing homes fell to 1.22 million in October, down 10,000 from September 2022, and less than the 1.39 million unsold existing homes in December 2019, according to the National Association of Realtors. (RELATED: Share Of First-Time Buyers Plummets As Young Americans Are Pushed Out Of The Housing Market)
“Although higher mortgage rates hurt affordability, slowing down housing demand, we see that home prices continue to rise … and it’s unlikely to fall sharply as inventory remains tight,” Evangelou told the DCNF. “So the key answer is inventory.”
While current inventory levels are higher than the calendar year-low of 850,000 unsold existing homes in January, 2022, it is the third straight month of declines, according to the NAR. With little indication that supply is improving, prices hikes will decelerate, but not reverse, Evangelou said.
“For 2023 we expect home prices to rise about 1%, so relatively flat with 2022,” Evangelou told the DCNF. “In 2024, we expect home prices to rise by about 5%,” which she characterized as being on the higher end of “more normal” annual increases between 3% to 5%.
Existing-home sales faded for the ninth month in a row to a seasonally adjusted annual rate of 4.43 million. https://t.co/jJsjgU0Qgn
— National Association of REALTORS® (@nardotrealtor) November 18, 2022
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