A Housing Recession Won’t Be Enough to Keep Home Prices From Rising—Here’s Why

As a market cooldown causes buyers to pump the brakes on home purchases, some economists are warning of a potential housing recession on the horizon, but that doesn’t mean home prices are likely to fall in the near future. Instead, prices are expected to grow through 2023, according to several housing forecasts. 

The median price for an existing home in the U.S. dropped from a record high of $413,800 to $403,800 in July, and home sales are down 20% year-over-year, but single-digit monthly price reductions are barely chipping away a 36% gain in median home prices since the start of the pandemic, CNBC reports. Housing prices are still expected to be up 11% for 2022 and will rise another 2% in 2023, according to NAR’s most recent forecast. 

And despite the decelerating price growth, median home prices are still up 10.8% from a year ago, according to NAR’s data. For context, median home prices have risen by roughly 4.5% a year since 1992, according to Federal Housing Finance Agency data.

“This isn’t a recession in home prices,” says Lawrence Yun, NAR’s chief economist. “A price decline on a nationwide basis is unlikely.”

That’s because demand for homes remains strong, primarily due to strong employment numbers and an “inadequate” supply of homes.

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