April marked the beginning of the typically busy spring real estate season, but instead of ramping up, home sales slowed down across most of the country. The median home-sale price nationwide also dipped slightly, according to a National Association of Realtors (NAR) report released April 20. These dynamics are not great news for the housing market, especially combined with steep mortgage interest rates — leaving many homebuyers and sellers alike sitting on the sidelines hoping for the landscape to improve. Here’s a closer look at the April 2023 housing market.
Big-picture housing market updates
Inflation continued its downward trend and sat at 4.9 percent in April, according to the Consumer Price Index. That’s a small decrease from 5 percent in March but a more significant drop from 6.4 percent at the start of the year. While energy and food prices are declining, housing continues to be one of the largest contributors to inflation overall. The shelter index increased 8.1 percent over the past 12 months.
The Federal Reserve meanwhile, continued to hike interest rates in its most recent meetings in May. Mortgage interest rates remain in fairly steep territory, though: As of the week of May 10, the current average interest rate for a 30-year fixed mortgage was 6.58 percent. Fed chairman Jerome Powell hinted that the rate hikes may now be over, at least for the time being, so it remains to be seen what will happen at the next meetings in mid-June.
With high interest rates and high prices creating a challenging market for prospective buyers, the market is cooling — but a crash remains highly unlikely. This market is unlike the housing bubble burst of 2008 for a variety of reasons, including much stricter lending standards today than were in place back then.
Monthly housing market metrics
Home sales: Existing-home sales declined 2.4 percent month-over-month between February and March 2023, to a seasonally adjusted annual rate of 4.44 million, according to NAR data. Year-over-year, though, the dip is much more substantial, down 22 percent from 5.69 million in March 2022.
Median prices: The nationwide median home price for March 2023 was $375,700 — that’s up slightly from $363,600 one month earlier, but it’s a decline of 0.9 percent from March 2022, when the median was $379,300.
Home Price Index: The most recent Case-Shiller U.S. National Home Price NSA Index, released April 25, reported the first home-price growth since the summer of 2022. Home-price growth rose in February by 0.2 percent, a slight increase that breaks a long streak of declines.
Housing market for sellers
While late spring and early summer are traditionally the busiest real estate times, this season is shaping up to be slower than usual. All four major regions in the U.S. experienced year-over-year sales volume decreases, according to NAR data — particularly in the formerly super-hot West, which dropped a hefty 30.5 percent. Month-over-month, the West, South and Midwest saw slight decreases, while the Northeast remained flat.
Home prices are heavily dependent on location, but they’re still holding strong overall. Some of the areas where prices are dropping the most sharply are the ones that were very steep to begin with. In San Francisco, for example, Redfin data shows that the median sale price has dropped nearly 11 percent since March of last year — but even with the double-digit decline, it’s still a sky-high $1.35 million.
So should you sell now, or wait for things to shift more in your favor? It all depends on your financial and life circumstances, of course, but the good news is that buyer demand still far outweighs supply. The country has just a 2.6-month supply of inventory, according to NAR data, which is far short of the 5 to 6 months needed for a balanced market. That keeps sellers in the driver’s seat, at least for the present.
Housing market for buyers
Mortgage interest rates remain daunting, which reduces your purchasing power as a buyer. That, combined with relatively robust home prices, continues to keep many prospective homebuyers waiting on the sidelines for now. If you’re still financially able to buy, though, you might be in luck: Fewer qualified buyers means less competition, which gives you both more leverage and more options.
Another thing currently working in buyers’ favor is what’s referred to as days on market, or the length of time homes spend on the market before selling. Per NAR, the typical property in March spent 29 days on the market, which is 12 days longer than in March of last year. This metric can vary greatly from one market to another, but generally, the longer a property languishes on the market, the more likely the seller might be to negotiate on price in order to get a deal done.
If you’re wading into the real estate market this spring, it’s important to do your research. Current market dynamics are complex and evolving rapidly. Sellers should make sure they have a realistic understanding of what their home is worth under current circumstances — and buyers should crunch the numbers to understand exactly how much house they can afford. Getting preapproved for a mortgage can also be very helpful to give you an idea of the amount a lender would be willing to offer you. Whichever side of the transaction you’re on, working with an experienced local real estate agent can help you navigate the market more successfully. Interview several candidates to find one you feel comfortable working with, and let them guide you through your journey.