Homebuying in a Recession—Is It Better to Wait to Buy?

The U.S. is entering into an economic downturn, and while experts say it may be too early to call it a recession, job layoffs, peaking interest rates, and turmoil in the banking sector have investors and prospective homebuyers feeling nervous about the state of the housing market. Higher interest rates are likely here to stay until inflation cools to a more stable level, and while higher borrowing costs aren’t ideal for today’s house hunters, they also mean lower home prices in the months to come, The New York Times reports.

A housing slowdown is also leading to less competition for available listings, and reduced buyer traffic means a faster turnaround for those buyers ready to pounce on home purchases. In addition, it also means sellers may be more willing to make concessions on list prices.

There’s more evidence house prices are falling in 2023. The S&P CoreLogic Case-Shiller Indices released its latest data at the end of March, revealing price growth dropped 2% from December 2022 to January 2023 to 3.8%. Crucially, the report found U.S. house prices have dropped seven months in a row.

So, prices are trending downwards after record highs. If interest rates continue to go up or stay at similar levels, we could see further decreases in 2023 - good timing for those would-be homeowners that have been waiting to pounce.

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