What a Housing Market Correction Means for Home Prices in 2023

After years of elevated homebuyer demand, record low inventory, and double digit price growth, the pandemic housing boom is finally coming to an end, and a correction could soon follow, experts say. The Fed’s persistent upward pressure on mortgage rates is sending homebuyers reeling, and in response to waning demand, sellers are beginning to reduce their asking prices. A cooldown is officially underway, Fortune reports, but what does that mean for home prices?

While every recent housing forecast published by research and data firms like Capital Economics, Mortgage Bankers Association, and Zillow outlines a period of home price deceleration in the coming months, the industry is split on just how low prices will go. 

Just four months ago, Zillow was predicting year-over-year home price growth would hit 17.8% next year. Over just four months, Zillow has slashed its price growth outlook by 8.1 percentage points. The reason? The U.S. housing market is slowing—fast.

Zillow is clearly the only housing bull left. However, not everyone is bearish. Over the coming year, CoreLogic predicts U.S. home prices will rise 5.6%. In 2023, the Mortgage Bankers Association and Fannie Mae forecast U.S. home price growth of 3.1% and 3.2%, respectively. If any of those three forecasts come to fruition, it would mean the U.S. housing market returned to a period of normalized growth. 

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