The S&P Case-Shiller home price index showed that home prices nationwide dropped between August and September. A month-over-month decline has been unheard of for the past two years. The ability to work from home and low mortgage rates allowed people to buy new homes. Historically low mortgage rates made homes more “affordable” due to smaller monthly mortgage payments. Next year appears to be a difficult one for home prices. Mortgage rates have doubled. The economy is in trouble. However, home prices are still forecast to rise in several cities. These are led by Worcester, Mass., where prices are expected to increase 10.6% next year. That will be the highest of America’s 100 largest cities.
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Realtor.com’s recent Housing Market Forecast report (subtitled “Homebuying Costs Aren’t Coming Down”) indicated that while the increase in home prices will slow, the momentum is still upward, due in part to low inventory. The report noted, “[W]e anticipate fewer home sales and fewer moves in 2023. Sales will be down not only from 2021’s elevated level, but also may be the lowest in a decade as still high home prices and mortgage rates keep the cost of purchasing high.”
Out of the 100 largest markets, only three are forecast to post home costs higher by double-digit percentages. Besides Worchester’s 10.6%, they are Portland, Maine, at 10.3%, and Grand Rapids, Mich., at 10.0%. Notably, each is a small market with relatively low prices.
Some large cities that have had influxes in population have home prices that will rise the least in 2023. This includes Dallas, where home prices will rise only 2.2%, as well as Miami (3.4%) and Phoenix (2.6%).
Americans will not be able to dodge higher home prices next year but, in several markets, they will barely rise.
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