Existing Home Sales Increased By 22.6% in February 2023

According to the National Association of Realtors, existing home sales increased by 22.6% year over year, after twelve straight months of declines.

Home sales increased by 14.5% on a month-over-month basis in February 2023. Both statistics are impressive and long-needed relief for the housing industry.

·      Existing home sales increased by 22.6% year over year, the first increase after 12 months of decreased sales.

·      The median sales declined by .2% to $363,000 on a year-over-year basis.

·      The total number of homes sold in February 2023 was 4.58 million

Home sales statistics can provide important insights for those involved in housing markets and the economy at large. The National Association of Realtors recently published data that revealed a 22.6% year-over-year gain, as well as an impressive 14.5% monthly increase; relieving the continuous 12 months of losses reported prior to February. Despite this glimmer of hope, only time will tell whether or not this turnaround will become a lasting trend. Those looking to buy or sell their home should keep their eyes on the market and take note of any new developments before making their decision; this way they can be sure to make an informed choice that best suits their needs.

Mortgage Rates Are Still High

The mortgage rate surge of 2022 came as a shock to many, and its ramifications continue to be felt almost a year later. Homeowners have been feeling the impact in their wallets as they grapple with the sky-high interest rates. When 2021 began, mortgage rates were at an all-time low of around 3%. But, according to recent statistics, they have exploded to 6.83%, a massive jump by any measure. Such an unprecedented increase in mortgage rates is likely not something American homeowners expected in their lifetime and has severely disrupted the housing market as well as people's financial plans across the country. This steep increase in mortgage cost has put even more pressure on already strained budgets and drastically lowered the number of home sales observed across America. The ripple effect of this hike remains visible amongst lenders engaged in the mortgage industry and for home buyers that are struggling to purchase the house of their dreams - despite the rising cost of mortgages.

Rapidly Increasing Interest Rates Are Causing Banks To Fail!

Inflation has been an increasingly serious problem in the US; this past year, inflation rates surged to a high of 9.1% before the Federal Reserve took action by increasing the Fed Funds rate. These increases have decreased inflation to 6.4%, but inflation is still over the inflation benchmark target of 2%. To combat inflation, the Fed Funds rate has been steadily tightening throughout 2022, climbing from .25% to 4.75%. While this put a strain on economic growth in the short term by raising borrowing costs for consumers and depressing spending, it may prove to be beneficial in reining inflation back in. It now appears as though these rapid increases in interest rates are at least partially to blame for stress and failures in the banking system.

US banks have been under significant pressure in the past few months, with Silicon Valley Bank and Signature Bank having already failed. Credit Suisse has also recently announced it will be acquired by its rival UBS. With US economic indicators such as high inflation, high-interest rates, and additional banking failures, the US economy has taken a hit for the worse. Specifically, it remains to be seen how these indicators are going to impact the US housing market. Already existing home sales have decreased significantly in 2022 compared to 2019, with cumulative sales volumes decreasing alongside sellers being forced to drop their prices in order to attract buyers. So far signs point towards a weak US housing market, yet we can only surmise precisely how much of an effect this is going to have on the US economy until all impacts are fully realized.

With the uncertainty in the banking system, many experts are questioning whether interest rates should be raised later this month. Raising the interest rate can lead to more stress for the already struggling banking sector, but doing nothing will cause inflation to continue to rise unchecked. Higher interest rates can help swallow up some of this inflation, however, if it is too drastic then it could lead to greater financial instability. Thus, deciding on interest rates is a tricky balancing act and requires careful consideration as to what will bring much needed stability without compromising ongoing economic growth.

US Jobs Market Remains Strong

Despite the ongoing economic downturn in many sectors, the job market is still a bright spot. Even with the recent wave of layoffs among large corporations across the US, the unemployment rate remains near its all-time low, showing that businesses are still recruiting and hiring new employees. This brings some small comfort to those who have been affected by these layoffs, as it shows employers are continuing to offer opportunities for employment despite challenging conditions.

Will We See A Housing Market Crash in 2023?

Despite the uncertainty in housing prices, experts have generally been bullish on housing markets in the next few years. The majority are predicting small increases or decreases in housing prices in 2023 - with a few predicting significant drops. It's important to remember though that different housing markets will likely experience varied results. While a housing boom can be seen in some areas due to increased trends of urbanization, housing prices could fall drastically elsewhere due to economic and credit issues. Ultimately, no one knows for sure what housing prices will look like next year - so it's wise to stay up-to-date on trends and local news regarding housing prices when making any major decisions.

Selling Your House?

Home sellers can be divided into two groups: those who must sell and those who want to sell. For home sellers in urgent need of a sale, we strongly advise acting fast as economic conditions are making it more difficult for homebuyers to purchase homes, and home prices may be declining in some locations. Even though a drastic market crash isn't expected, home sellers still should take their individual circumstances into consideration. Those home sellers selling out of choice should bear in mind that the market is different from before, likely meaning fewer offers will show up than expected; patience is paramount for home sellers wanting an effective outcome in this market climate.

What Should Home Buyers Do?

Home buyers have plenty to consider when shopping for a home, particularly the current and future mortgage rates. Experts anticipate that by the end of 2023, the Federal Reserve plans to continue increasing its fed funds rate, likely leading to higher mortgage rates throughout the year. However, there is also talk of mortgage interest rates decreasing rather than rising during this period. Before home buyers make their decisions, they should consider their local market conditions and determine whether a new home purchase is in line with their financial situation if borrowing costs and home prices increase. Doing due diligence ahead of time can help home buyers save money while still making the home they want an attainable goal.

In Conclusion

The housing market in the US is currently in a state of flux due to the impact of the current pandemic. As competitive housing markets lessen, houses may stay on the market for longer than they previously did. This transition can be seen as positive by buyers and sellers alike, but it will require industry insiders such as real estate agents, real estate investors, and other professionals to adjust their methods. How this housing market development continues to evolve over time remains to be seen, but it will certainly bear watching in the near future.