2023 Summer Housing Market Forecast

It is hard to predict what will happen in the housing market, even in normal times. Given that the economy is not normal right now, predicting what will happen in the housing market over the coming months is pretty much a fool’s errand. But it is important to have an investment thesis, which is also interesting, so I will try anyway.

Below I will share my five predictions for the housing market in the summer of 2023 and three important indicators to watch that could completely change my outlook.

1. Mortgage rates will fluctuate, but will remain between 6.25% and 6.75%

As of this writing (mid-May), the Fed raised the federal funds rate by 25 basis points at its most recent meeting, but has indicated that it is considering pauses in the future. I think the assumption that the Fed is done tightening is overconfident, as core inflation remains high and the labor market is very tight.

Average 30-Year Fixed Rate Mortgage in the United States (2018-2023) - Federal Reserve of St. Louis
Average 30-Year Fixed Rate Mortgage in the United States (2018-2023) – Federal Reserve of St. Louis

No matter what the Fed does, I think mortgage rates will remain relatively similar to where they’ve sat for the past few months. Since peaking (so far) in November, mortgage rates have stayed in the mid-6s, despite the Fed raising hundreds of basis points over that period. Bond yields have remained flat, which means mortgage rates are holding steady.

2. Home prices will rise from their winter lows, but will remain down year-over-year

When we look at home prices, we need to look at the monthly and yearly data. Monthly data shows the latest information but neglects long-term trends. Annual statements do the opposite.

4-Week Average Trading Price of Homes Sold (2020-2023) - Redfin
4-Week Average Trading Price of Homes Sold (2020-2023) – Redfin

When I look at sales price data, I see two things. First, the seasonal patterns hold up. Prices have been rising over the past two months after bottoming out in February. This is what usually happens. Secondly, although the prices have increased, they are still lower than last year’s prices and are decreasing year by year.

I think this is likely to continue. In my view, the market will follow seasonal patterns but will remain below last year’s prices at least until August. While I don’t think this is the most likely scenario, I do think there is a good chance that the national market is already showing positive price growth sometime after the summer.

If you’re wondering about my track record with forecasting, the last time I made a price forecast was in the fall of October 2022, and I said I think the national housing market will drop somewhere between 3-8% by the end of 2023. Right now, the average ​National sales price of 2-3%, depending on who you ask, so I’m in the range and still see that as the most likely scenario – but a lot could happen before the end of the year!

3. Home sales will not recover

Seasonally adjusted home sales volume is the lowest in about a decade. This tends to put downward pressure on home prices but also has general indications for the entire housing industry. Low sales volume is hurting agents, loan officers, and other professionals who serve the housing industry.

National Home Sales (2012-2023) - Redfin
National Home Sales (2012-2023) – Redfin

However, I don’t think volume is going to recover anytime soon because there aren’t enough properties in the market, even if demand does recover. Which leads me to my next prediction:

4. July and August will see the lowest new listing on record

New listings measure the number of properties for sale in a given period and are now rock bottom. Nationally, they’re down about 22% year-over-year; In some markets, it’s down over 60%. There’s not much in the market, and I don’t see any signs of that changing in the next three months.

National New Home Sale Listings (2012-2023) - Redfin
National New Home Sale Listings (2012-2023) – Redfin

As such, I see July and August as the lowest totals for those months in a long time as far as I have data. In other words, this July will have the lowest number of new listings of any July in the past 20 years. Expect the same for August. People just don’t want to sell now.

5. Regional differences will prevail

So far, my first four predictions have been about the national housing market, but we all know real estate is local. Here are my regional forecasts:

  • The Northeast will see the most price growth over the summer, followed by the Midwest.
  • The South will be a mixed bag. Some markets (such as Miami, Florida) will continue to grow, while others (such as Austin, Texas) will struggle.
  • The West will see some recovery in the markets. It’s been well documented that the West has seen its largest price correction to date, but I think that may be over in some markets. Some cities like Salt Lake City, Utah; Los Angeles, California; and Denver, Colorado, has already shown signs of picking up, while markets like Boise, Idaho; And Las Vegas, Nevada, continues to show weakness.
Average Selling Price of Selected Western Metro Companies (2018-2023)
Average Selling Price of Selected Western Metro Companies (2018-2023)

Things to watch

The forecast above represents what analysts call the “base case”. This is what I think is the most likely scenario. But I obviously don’t know what’s really going to happen, and the chances are reasonable that the market will outperform my expectations or underperform. For me, the most likely thing that could turn the market away from my base state is:

  1. Defaulting on the debt of the United States: As of this writing, the government is at an impasse trying to negotiate an agreement to raise the debt ceiling. If that does not happen and the United States defaults on its debt for the first time in history, it will almost certainly raise mortgage rates. Zillow recently predicted it would spike above 8% — and when they come back down is anyone’s guess. If this happens, I think the downside becomes more likely.
  2. Labor marketThe labor market has been shockingly resilient in the face of rising interest rates, with nearly every measure of unemployment at an historically low.
Percentage Change in Insured Continuing Claims and Unemployment (2021-2023) - Federal Reserve of St. Louis
Percentage Change in Insured Continuing Claims and Unemployment (2021-2023) – Federal Reserve of St. Louis

The job market is strong even when you’re responsible for part-time jobs and people leaving the workforce. If the job market “collapses” and unemployment rises, that will likely cause a recession, possibly lowering mortgage rates and helping the housing market. This is, of course, unless the unemployment situation gets really bad (more than 6-7%), and then it could negatively affect the market.

Employment-to-population ratio for adults, 25-54 (2018-2023) - Federal Reserve of St. Louis
Employment-to-population ratio for adults, 25-54 (2018-2023) – Federal Reserve of St. Louis
  1. geopolitical turmoil: We all know that there is a lot of tension with Russia, China and the world in general right now. International conflicts can really affect the economy, but there is no way to know how without knowing the nature of the conflict. I just want to say that if there is a major international problem, it may nullify my expectations.


This is my current thinking about the housing market and where it will go during the summer of 2023. But all of this is far from certain. We’ll have to check back in the fall and see how you did with those expectations.

In the meantime, I’d love to hear your 2023 summer housing market forecast in the comments below.

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Note by BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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