(NEXSTAR) – If you’re looking to purchase a home in the new year, you may want to consider the South.
A National Association of Realtors forecast found that 10 housing markets are expected to outperform in 2023, a year that will follow a period of whiplash for buyers and sellers.
As 2022 began, the nation’s housing market was still running red-hot.
House hunters competed for the fewest homes for sale in more than two decades, fueling bidding wars that pushed prices sharply higher. The average rate on a 30-year mortgage was slightly above 3%, near historic lows.
Then mortgage rates started to climb, spurred by expectations of higher interest rates as the Federal Reserve began raising its short-term lending rate in a bid to tame inflation. By October, the average rate on a 30-year home loan soared above 7%, a 20-year high.
Higher mortgage rates combined with still-rising home prices make it difficult for many would-be buyers to afford a home. Sales of previously occupied U.S. homes saw their biggest sales slump in more than a decade.
Markets to keep an eye on
When it comes to 2023 and possibly beyond, Atlanta is set up to be the top real estate market in the country, according to the NAR. Criteria for the selection process included better housing affordability, renters who can afford to buy a median-priced home, job growth, population growth and the number of teleworkers, among other measures.
The top five markets, according to the NAR, are:
- Atlanta-Sandy Springs-Marietta, Georgia
- Raleigh, North Carolina
- Dallas-Fort Worth-Arlington, Texas
- Fayetteville-Springdale-Rogers, Arkansas-Missouri
- Greenville-Anderson-Mauldin, South Carolina
For the full list, see the NAR report.
So what’s next for the rest of the country?
Researchers with NAR are predicting a nearly 7% decline in existing-home sales in 2023, with prices rising .3% on average – far less than the 9.6% jump in 2022.
“Half of the country may experience small price gains, while the other half may see slight price declines,” said Lawrence Yun, NAR chief economist and senior vice president of research. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%.”
Real estate listings website Realtor.com cautions homebuyers against expecting great deals, despite a growing number of homes for sale.
“If home shoppers and sellers have unrealistic expectations, they could find themselves in a stale-mate in the year ahead,” chief economist Danielle Hale wrote in the site’s 2023 forecast. The 2023 housing market could become a “nobody’s-market,” not friendly to buyers nor to sellers.”
So how should a buyer approach the market in 2023?
Attention to changing conditions, patience, creativity and flexibility will be key to navigating the market, Hale writes.
The Associated Press contributed to this report.