Has The Housing Market Recovered From The Late 2022 Record Low?

At the end of November 2022, it was predicted that 4.2 million homes would have been sold throughout the year. However, this did not come to pass: According to Trading Economics, only 4.09 million homes were sold, furthermore, November was the tenth consecutive month of declines in sales. This number is also the lowest the market has seen since May 2020, right after the start of the COVID-19 pandemic. They say that these low numbers have mostly been caused by increased mortgage rates and home prices, which are making it much more difficult for homebuyers to afford properties.

However, Capital Economics is somewhat optimistic about the future. They say that, because mortgage rates have declined recently, houses have become a bit more affordable, which has led homebuyers to start looking at properties again. Further, they also note that there have been more mortgage applications recently, which could predict a higher number of home sales in the future. But, does this mean that the market has actually recovered from its record-low number of home sales?

Even though Capital Economics acknowledges that mortgage applications have risen, they also predict sales to still be down throughout 2023 and say that a trough will most likely soon occur. This is because the figures are still not even close to what they were pre-COVID-19. In fact, according to Fortune, mortgage rates doubled in the last year and prices increased by over 41% in over two years. 

At the same time, no one is expecting these numbers to decrease even close to where they were before the pandemic, and they don't need to for the market to recover. Capital Economics says that a 6% to 7% decrease in house prices would be a great improvement, though they don't expect this to happen during 2023. Other experts do expect prices to drop by close to 10% in 2023, which would bring the market back to prices similar to those seen in October 2021. However, market expert Rick Sharga isn't as hopeful, as he expects the number of home sales to continue to decline well into the new year (via Bankrate.)