Housing markets are like living organisms: they grow, age, and evolve. This market is no exception. The trends fluctuate with the economy and housing supply, but the things that stay the same are primary supply and demand principles. Housing market trends are hard to predict, but there are a few predictions we can make with some certainty.
Single-Family Home Sales Are Expected to Rise By 3.3 Percent, Reaching $2.5 Trillion.
The housing industry has been dealing with many challenges recently, but the demand for housing options has not seen any significant downtrend, especially in the case of single-family homes. Whether a simple accommodation in a suburban apartment or an elaborate home based on governors club real estate, there might be a rise in the volume of real estate sales in the financial year of 2022-2023.
According to a report from the Joint Center for Housing Studies at Harvard University, single-family home sales are projected to rise by 3.3 per cent to $2.5 trillion. The report, titled “Housing Market Outlook: The 2022 Outlook,” also projected that homeownership rates have risen from 65.6 per cent in 2017 to 68.5 per cent in the last year, with the increase in sales primarily driven by demand. Renters, however, aren’t left out of the housing market: rental vacancy rates are forecast to reach 4.4 per cent at the end of the year, an increase of 0.6 percentage points over 2017. As a result, more Americans are expected to purchase or rent houses.
Single-Family Homes Average 2,396.6 Square Feet
Every year, the U.S. Department of Housing and Urban Development (HUD) releases its annual report, which includes an analysis of the housing market and current trends in housing. The most popular section of the report is the inventory overview, which provides the key numbers for each housing category (ex., single-family homes, multi-family homes, etc.). The inventory overview for the third quarter of 2018 released last week is particularly interesting because it provides average square footage for each housing category. According to this report, in 2023, single-family homes are projected to average 2,396.6 square feet, compared to 2,350.4 square feet in 2017.
Median Home Price Is Expected to Rise By 3.9 Percent, Reaching $252,000
According to the American real estate firm Zillow, home prices are expected to rise by 3.9% this year, reaching $252,000. This is the fifth consecutive year of rising home values, and this upward trend is expected to continue into the future. Homeowners, real estate experts, and economists alike are predicting that home prices will continue rising until 2023 when the median home price will reach $285,000.
The Median Price Per Square Foot Is Expected to Increase By 3.2 Percent, Reaching $144
It’s true that housing prices are on the rise, so what does this mean for you? It means that now is a great time to buy! The median home price is projected to increase by 3.2% in 2023, which translates to $144 per square foot. This means that it’s less expensive now than ever before to purchase your home!
New Single-Family Homes Are Expected to Rise By 2.0 Percent, Reaching 667,000
According to the National Association of Home Builders, new home starts are expected to rise by 2.0 per cent, reaching 667,000 in 2023. The number is set to increase compared to previous years, and this will bode well for the overall housing market. The outlook for next year and beyond is positive. As the labour market improves, workers will have more funds available to purchase homes and other big-ticket items.
Housing affordability is a major concern in the United States, but there are many ways the market can change. As long as housing prices stay high, wages cannot and should not rise. The Federal Reserve’s monetary policy also has a role to play in the housing market. If the Fed continues to raise interest rates and the amount of liquidity in the system decreases, housing prices could fall more.
Real estate professionals expect prices to keep rising. Construction professionals expect an even stronger market. Developers expect new entrants. Homeowners expect to hold on to the value of their homes. This will continue to push home prices higher. The housing sector is primed for continued growth in 2023. The market is expected to remain strong despite increasing mortgage rates and employment gains. Rising mortgage rates will slow housing starts but arrest a decline in existing home sales.
Small builders remain cash-flow positive, while large builders have higher leverage than a year ago. Despite a well-documented housing shortage, builders should be eager to take on more housing inventory. The outlook for 2023 is for continued, gradual growth. The housing market will continue to thrive through 2023 as demographic trends support continued demand for housing.