What Housing Market Crash? U.S. National Home Prices Up 1% In January

Aerial View of Buildigns

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Low interest rates, coupled with a growing housing shortage, have led to rising home prices in early 2023, according to Lawrence Yun of the National Association of Realtors. Yun spoke to CNBC on Monday morning, noting that although home sales transactions have declined throughout 2022, average home prices in January 2023 are up 1% from a year ago.


Housing prices are moderately higher or lower

Yun explained that while major cities like San Francisco and Seattle are experiencing house price declines, the real estate market in “fast job creating areas” like Atlanta remains hot. He added that half the country is seeing modest price gains, while the other half is seeing modest price declines, with few exceptions like San Francisco, where prices are down roughly 10%.

The direction of the housing market will depend on external factors and trends, Yun said. The “stubbornly high” rate of inflation is keeping mortgage rates elevated, but if inflation trends lower, mortgage rates will become “much more attractive for the remainder of the year.” This, in turn, will result in “steady growth” of home sales as buyers understand the long-term value appreciation of their homes.


America is ‘still creating jobs’

Yun emphasized that mortgage rates are the most important variable that determines the direction of the housing market, while job creation is the second most important factor.

As a whole, America is “still creating jobs,” which implies that pent-up housing demand is “still building up”. Once the mortgage rate decreases, Yun said that we can expect to see homebuyers returning, although it won’t be a frenzy condition with 20% price gains. Steady 3%, 4%, or 5% annual gains are more plausible expectations for the upcoming years.


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