Home prices fell from historic highs in a number of overheated regional markets during a nationwide housing correction at the close of 2022, but after a slow fall and winter period, prices are rebounding in the spring. Case-Shiller data recently reported an uptick in home prices after steady declines since last June, and Zillow also saw an unexpected 1% month-to-month increase in prices for April.
Regional markets are also seeing very different home price gains, with western markets reporting clearly falling prices and the East Coast still posting strong growth. A 2023 home price outlook hinges largely on the Federal Reserve, as elevated interest rates continue to slow the housing market. If rates fall significantly during the months ahead, the housing market could come back to life even amid higher prices and waning inventory, Forbes reports.
Despite recent positive trends, affordability is likely to continue to weigh on home prices. The Atlanta Fed’s Affordability Monitor is well into the red as interest rates have caused mortgage costs to spike and incomes have not moved up as fast as prices over recent years. The current level of affordability is at lows not seen since 2007. That may continue to weigh on home prices, despite recent signs of life.