The state of the U.S. housing market heading into the new year is uncertain with mortgage rates, though easing in the past month, still near a 20 year high, and more potential buyers priced out of the market. But most forecasts agree that sales will continue to slow in 2023.
In the D.C. region, sales have already slowed significantly.
“Home sales in November were down 42% compared to November 2021. That is remarkable in and of itself, but in November we hit a decade low in terms of home sales for a November,” said Lisa Sturtevant, chief economist for Mid-Atlantic listing service Bright MLS.
In addition to slowing sales, nationwide forecasts predict prices will also retreat, though predictions for how much vary widely, and by location. Redfin forecasts prices nationwide will fall an average of 4%.
In the D.C. region, Bright MLS expects prices to hold up in 2023.
“We’re actually not seeing an outlook for prices to fall in the Washington area. Our forecast is for prices to be up about 1% year-over-year. The reason for that is we are seeing both side of the market contracting. Both the demand side and the supply side,” Sturtevant said.
Bright MLS’s 2023 forecast says potential buyers will face less competition and gain some contract negotiating leverage, dynamics already observed by the Northern Virginia Association of Realtors.
“Now we are seeing the return of home inspections and appraisals instead of waiving those contingencies, only one or two competing offers on a home, rather than 12 offers, and homes selling for closer to their list price, instead of tens of thousands over list,” said Northern Virginia Association of Realtors Director Casey Menish.
The median selling prices in the D.C. metro area in November of about $539,000 was 1.4% higher than November 2021. The number of new listings coming on the market was down 22% from a year ago.
“Price compression has not happened just yet because inventory remains tight,” said Harrison Beacher, president of the Greater Capital Area Association of Realtors. “For those active in the market, it feels more balanced that it has in a while.”