April 2023 Economic and Housing Market Update

April 2023

• The Realtor.com® economics team April Housing Market Update video gives you the relevant economic and real estate information you need to know to navigate the housing market as a homebuyer, home seller, or industry professional.
• In April, Chief Economist Danielle Hale discusses the decision from the Fed’s March interest rate setting meeting and what that might mean for the economy and the path of interest rates moving forward. She also highlights trends in the key employment and inflation data that will factor into the next Fed decision in early May.
• For homeshoppers, mortgage rates have been on an up and down path, easing and then rising again. Danielle discusses what’s ahead and what that might mean for buyers and sellers, many of whom are being impacted by mortgage rate “lock in.” 
• Danielle reviews what Realtor.com’s March Housing Trends report says about buyer and seller activity in what’s typically the “Best Time to Sell.” She also notes how this latest data aligns with recent trends in Existing Home Sales & New Home Sales and which markets are seeing relatively more activity as surfaced in the March Hottest Housing Markets report.
• Finally, Danielle shares what March home purchase sentiment and recent rental market trends suggest for households trying to buy, sell, or rent in the months ahead.
• Find details and Realtor.com® housing data for download at realtor.com/research.  And follow us on twitter: @rdc_economics, for real time updates.

VIDEO TRANSCRIPT:

• I’m Danielle Hale, Chief Economist at Realtor.com® and here’s what you need to know in April!
• The Fed raised its policy rate a quarter point in March but did not further increase its year-end 2023 rate projections as it noted that bank failures could mean less monetary tightening is needed. Whether this means a shallower path for interest rates or not depends on what happens to the economy. Stronger economic & inflation data could dash hopes for lower rates.
• In fact, the most recent jobs report showed that while job growth cooled, unemployment remained at a long-term low. Job openings have dropped, but there’s still a fair amount of labor market strength. And many small businesses still cite quality or cost of labor as their single most important problem alongside inflation and taxes.
• Inflation continues to cool gradually, roughly in line with expectations. Prices for key necessities–shelter and food–continued to climb, but more recent housing & rent data, including from Realtor.com, shows slowing growth that will eventually be picked up by the government’s measures. 
• In the second half of March and early April, mortgage rates eased as bank failures raised concern for the broader financial sector. So far, we’ve not seen an impact on economic readings, and in the last week mortgage rates inched back toward 6.5%. 
• On balance, mortgage rates are a pretty big wildcard for both home shoppers and sellers. Interestingly, a survey of recent potential sellers who would also need to buy a home showed that 82% felt “locked in” by their existing low mortgage rate. As mortgage rates settle, we are likely to see inventory begin to improve more meaningfully alongside housing demand.
• Realtor.com’s March Housing Trends report shows that inventory continues to climb relative to one year ago as homes sit longer on the market. One thing that is unfortunately not a huge driver of the increase is SELLERS. New listings continued to decline. Reflecting slower market conditions, price growth eased further to 6.3%, but the median home listing price is still climbing for the season, reaching nearly $424,500. Regionally, the South has seen the biggest surge of inventory and smallest decline in new listings. The West saw the lowest pace of home price growth with a handful of markets in the South and West seeing median price declines.
• We saw similar trends in Existing Home Sales & New Home Sales which bounced notably higher in February. Momentum slipped somewhat in March for existing home sales. Both home shoppers and sellers remain very interest rate sensitive. One other key stat: while listing prices continue to climb, the median home sales price is declining, registering year over year drops in both February and March. This trend was driven by price declines in the West. All other regions saw home prices go up. 
• This lines up with our March Hottest Housing Markets report which found that the 20 hottest markets in the country were all in the affordable Northeast and Midwest with Rochester NY taking the top spot.
• Looking ahead, home purchase sentiment improved in March, but remains quite low. I expect to see a very gradual and uneven climb for home sales in the year ahead with more regional variation than we’ve seen over the past few years.
• One bright spot for the housing market and sellers in particular: mid-April is the time of the year that is the “Best Time to Sell.” Homeowners listing homes now can expect relatively faster sales and higher prices because we’re in the seasonal point when demand typically far outstrips supply, creating a clear plus for sellers.  For buyers, the upside is that we typically see the number of homes for sale climbing sharply ahead and staying elevated through fall, so seasonal competitiveness is likely to start to wane in most markets in the months ahead.
• If the competition has you thinking you’d prefer to rent, note that households in the rental market continue to feel the pinch of rising rents. While the pace of increase has slowed, rents continue to eat up a larger portion of household paychecks. The median asking rent in the least affordable Miami market was more than double the rent in the most affordable market–Oklahoma City.
• You’ll find all the details along with our housing data for download at realtor.com/research.  You can also follow us on twitter for real time updates.

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